Crude Oil Down on Dollar, Demand - TheStreet

NEW YORK (

TheStreet

) -- Crude oil settled below $73 a barrel on Tuesday--marking the fifth consecutive time that it has finished the session weaker.

Crude oil for January delivery on the Nymex lost $1.31, or 1.8%, to close Tuesday's trading session at $72.62 a barrel as a strengthening U.S. dollar and expectations for higher stockpiles pressured futures prices.

Without a weaker U.S. dollar boosting crude oil's investment appeal -- the Dollar Index was up 0.7% late Tuesday -- traders had little to go on outside of the commodity's fundamentals.

Barclays Capital analyst Costanza Jacazio said crude's weakness was partially a result of oversupplied inventories in the Midwest even though other areas of the U.S. have seen draw-downs in supplies.

"With the exception perhaps of the very front end of the WTI curve, we believe there is little room left for further significant downside in prices, barring an abrupt interruption to the ongoing economic recovery," Jacazio said.

Those fundamentals looked slightly less bleak late Tuesday after the American Petroleum Institute reported a decline in crude stockpiles. The industry group said crude oil inventories fell by 5.815 million barrels, which was much better than the 600,000-barrel increase that analysts polled by

Platts

were expecting. According to the API, distillate supplies rose by 1 million barrels and gasoline stocks decreased by 753,000 barrels. Analysts had forecast a 400,000-barrel drop in distillates and an increase of 1.8 million barrels to gasoline supplies.

The government's Energy Information Administration releases its own inventory data on Wednesday at 10:30 a.m. EST.

The

United States Oil Fund

(USO) - Get Report

ETF closed Tuesday down by 64 cents, or 1.7%, at $36.85.

Oil-related stocks were some of the day's weakest, with the NYSE Arca Oil Index dropping nearly 2%.

Chevron

(CVX) - Get Report

and

ConocoPhillips

(COP) - Get Report

finished down by 1.8% and 1.7%, respectively.

Exxon Mobil

(XOM) - Get Report

shares closed lower by 82 cents, or 1.1%, at $72.95 after deciding to move forward with

a $15 billion liquefied natural gas project in Papua New Guinea. Partners on the project include

Oil Search

,

Santos

and

Nippon Oil

, with construction expected to begin next year.

Forest Oil

(FST)

shares shed 30 cents, or 1.6%, to close at $18.87 despite an

upgrade from analysts at Morgan Stanley.

With cold temperatures finally expected for the U.S. the market is anticipating a turnaround in demand for natural gas. The January contract gained 14 cents, or 2.9%, to settle at $5.11 per million British thermal units. January gasoline futures lost nearly 2 cents, or 0.8%, to $1.92 a gallon and January heating oil shed nearly 2 cents, or 0.9%, to settle at just under $2 a gallon.

--Written by Sung Moss and Melinda Peer in New York