Oil Prices Fall for Second Day on Demand Concerns, Strong Dollar

As of 8:52 am EDT, the price of crude had dropped by 0.7 percent to reach $73.88 a barrel and the price of heating oil had declined by 0.9 percent.

HEAT USA Price Report

Today’s average retail heating oil price per gallon: Down $0.02
Morning projection (for Monday’s average price per gallon): Down $0.03

Europe’s debt crisis continued to have a twofold effect on oil markets, both of which serve to push down the price of crude and heating oil. First, the debt that is weighing down Greece, Spain, and Portugal will act as a drag on Europe’s economic growth, and slow down the recovery of oil demand that analysts anticipate will follow economic recovery. Expectations for demand to remain weak are exerting a downward pressure on oil prices. Second, European debt is undermining the value of the euro, and the dollar has made significant gains relative to the European currency. A stronger dollar diminishes the appeal of oil as an investment, because it makes crude oil and heating oil, which are priced in dollars, more expensive for traders who hold other currencies.

HEAT USA price experts report that Europe’s troubles have encouraged some traders to be more skeptical about the prospects for the recovery of the global economy and global oil demand. However, some economic indicators will be released on Friday—US industrial production and retail sales—that could change traders’ sentiment and support higher oil prices.