Oil follows Wall St down

24/02/2009

Oil futures fell during trading yesterday (February 23rd) as Wall St sunk to a 12-year low, stoking fears about the health of the US economy.

On the New York Mercantile Exchange, crude futures for April retreated $1.59 (£1.09) to finish the day at $38.00 a barrel.

Heating oil contracts also finished the day down as investors grew cautious about the prospect of the nationalisation of parts of the US financial system.

"For the short term however, the weakness in the US stock market is the 'big elephant in the room' and should continue to weigh on commodity sentiment," said a research note from MF Global cited by Reuters.

Meanwhile, traders in commodities such as crude and heating oil are likely to be anticipating new inventories data from the Energy Information Administration which is expected to show a further drop in demand for oil products.

In such a scenario, prices of crude and heating oil could take another tumble tomorrow.