As economic conditions continue to feed bearish sentiment, crude oil futures sustained heavy losses on Tuesday. On the IntercontinentalExchange, West Texas Intermediate light, sweet crude oil futures for October delivery dropped more than 4 percent to $71.67 per barrel.
December 2010 futures contracts lost a bit over 3 percent to $74.78 per barrel.
Brent crude futures, which are more internationally oriented than the U.S.-specific WTI crude futures, lost 3.02 percent to $74.35 per barrel, a spread between the two contracts that may represent weaker demand on this side of the Atlantic.
“In the near term, we’re going to see some concern as refiners here in the U.S. go down for maintenance,” said Hussein Allidina of Morgan Stanley in an interview on Bloomberg Television’s ‘InBusiness’ segment. “As we go into the back half of the year things do start to look more positive.”
Another reason for the drop-off is the ending of what some call the “summer driving season,” which peaks on Labor Day. After that date, workers tend not to take as many holidays and drive less.
In addition, Hurricane Earl appears to be headed for the East Coast rather than the Gulf of Mexico, meaning production will not be threatened but tourism will be damped down.
Risk Disclosure
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.