Oil futures were dropping again Wednesday on fears that a U.S. recession could constrict demand for the commodity.
West Texas intermediate crude for March delivery, the new near-term contract, was recently down $2.13 at $87.08 a barrel.
Reformulated gasoline was losing 3 cents at $2.25 a gallon. Heating oil was 4 cents lower at $2.44 a gallon, and natural gas was off 7 cents at $7.60 per million British thermal units.
Some traders are saying that they are getting out of their energy positions as margin calls come in for their holdings in other markets. Stocks around the world have largely been battered in recent days, and in New York the
Dow Jones Industrial Average
was recently down more than 200 points.
Bearish comments by Energy Secretary Samuel Bodman were also weighing heavily on crude prices. While touring the Middle East on Tuesday, Bodman told reporters that although the economy has appeared to withstand the run-up in crude, he believes that the high prices will ultimately have some impact on demand.
According to Edward Meir, energy analyst at MF Global, crude is set to test technical support levels in the mid-to-lower $80s. "In WTI's case, technicals suggest that a test of the $85.52 is still on track, and below that, a test of the major uptrend line looms at $81."
Such a move lower would need to be precipitated by a major market event, Meir wrote in a research note. This week's Energy Department inventory figures, due Thursday, could do it, especially "if the data shows that demand is finally starting to give way after months of holding steady. A higher-than-expected rise in crude stocks will also be negative."
Meanwhile, stocks in the energy complex were again weaker. Shares of
were down 4.2% at $59.88.
Royal Dutch Shell
fell 5.1% at $69.06, and
was 1.5% lower at $81.24.