NEW YORK (The Street) -- Crude oil broke below $58 Wednesday -- a day before the U.S. Energy Information Administration's (EIA), releases weekly inventory data -- as the narrowing crack spread sparked oversupply concerns.

Crude has mostly been a technical trade around the U.S. dollar rather than trading on underlying fundamentals, said Mike McPartland of McNamara Securities. Commodities are priced in U.S. dollars, so as the greenback moves higher, instruments like oil and gold generally move lower, and the inverse applies due to the strong correlation in the moves.

The U.S. dollar moved higher on the durable goods report the U.S. Commerce Department released Tuesday morning, suggesting business investment is slowly starting to pick up following stronger-than-expected Consumer Price Index (CPI) reading last week.

Commodities move on other fundamentals such as supply and demand in addition to the U.S. dollar, and in the case of oil, the supply side far outweighs demand and consumption.

The crack spread has weakened significantly, McPartland said.

The crack spread is the difference between crude and the refined products like gasoline and heating oil. The narrower the crack spread is, the more bearish it is for crude because it signals poor demand and is bearish for refiners as it impacts margins.

Even though the summer driving demand season will soon kick in, crude is a futures-based market and the charts are failing to gain to the upside.

Crude is continuing to break down on the charts, and if the U.S. dollar stays on its course higher, crude could go to $52, McPartland said.

Ultimately, the oil supply glut still exists and that makes it very difficult for fundamental traders.

McPartland noted that, right now, the crude market is very technically and psychologically-focused, rather than supply-focused. Until supply levels really drop lower and/or production slows, fundamentals will remain strained and crude prices will be depressed.

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