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Pro: Too Many Headwinds Facing Crude Oil

Friday, 1 Mar 2013 | 3:04 PM ET
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The "Futures Now" team discuss what's the next stop for crude.

Facing a myriad of headwinds, Brent crude oil slipped to a six-week low below $110 per barrel on Friday, prompting some professional traders to think black gold will likely suffer further declines.

From U.S. dollar strength to weak economies in Europe, pro trader Anthony Grisanti said there are many factors driving oil prices lower.

(Read More: Brent Crude Slips to $110 on Global Growth Worries)

In China, domestic and foreign demand slackened as the official Purchasing Managers' Index (PMI) missed expectations easing to 50.1, its lowest reading since September 2012, the government said Friday.

Meanwhile, surveys showed British manufacturing shrank unexpectedly in February, while France's factories suffered their 12th consecutive monthly fall in output and industrial activity in Spain and Italy deteriorated again.

Grisanti added that there are record supplies of oil in Cushing, Okla., a major global storage center for crude stockpiles.

(Poll: Are You Buying or Selling Crude Right Now?)

"There's weakness and uncertainty in Europe, which makes the dollar go higher, but that also makes crude go lower, too," said Jim Iuorio, a commodities trader at the Chicago Mercantile Exchange. "So it's almost like a transitive property and can't decide whether it's because of the global weakness or if it's because of the strong dollar, but either way, it's the same story."

In turn, Brent crude futures fell $1.56 to a low of $109.82 per barrel, its weakest since mid-January, before recovering slightly to around $110.10 by midday trading. For the week, the contract is down more than 3 percent, its third consecutive weekly loss.

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U.S. light, sweet crude fell to a low of $90.44, down $1.61. The contract has lost more than 2.5 percent for the week.

From a technical perspective, Iuorio thinks crude will find support at $89.40 a barrel. If it does reach that level, he might consider getting into the oil trade.

To Joe Terranova of Virtus Investment Partners, however, the energy commodities in general are not attractive right now.

"I wouldn't overweight oil. I wouldn't overweight the coal names," Terranova said. "What has not worked so far is going to continue not to work. There are other places that you want to be. China's PMI was lousy [and] that affects the natural resource trade."

— By CNBC's Drew Sandholm with Reuters

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