Oil Loses Ground on Wall Street Woes
NYMEX crude futures reversed this week's gains on Friday as oil traders grew risk averse on fraud charges brought against Goldman Sachs Group Inc, Wall Street's most profitable bank.
Susceptible to swings in the broader financial market, the price of light, sweet crude oil for May delivery was down by more than 3% ahead of the weekend, ultimately closing on the downside at $83.24 a barrel.
Today both the equities and commodities markets lost ground after U.S. securities regulators charged Goldman Sachs with fraud in the structuring and marketing of a debt product linked to subprime mortgages.
Already weakened yesterday by a strong recovery in the dollar, oil futures slipped further away from a new target price of $90 on the news.
"Earlier this week, the contango in the futures spreads really started to strengthen," added Darin Newsom, senior analyst with DTN. "This indicated that commercial traders were growing more bearish."
Additionally, Newsom underscored a sell off from long hedge fund positions in the commodity market, particularly for oil and gold, as well as some commercial liquidation spurred by the upcoming expiry for the May front-month contract.
On the opposite side of the energy coin, natural gas spot prices at the Henry Hub burned brighter on the commodity exchange, closing the session higher at $4.04 Mcf.