U.S. oil futures closed below the psychologically important $50 level—possibly signaling more declines to come and a retest of the March lows.
West Texas Intermediate settled down $1.67 at $49.19 per barrel, the first close below $50 since April 2. U.S. government data Wednesday showed a bearish increase in crude inventories last week of 2.5 million barrels, slightly more than expected. The stronger dollar was also a negative.
Some strategists say the latest move down could be setting oil up for a run at the March low, just above $42 per barrel. But crude could also temporarily stay trapped in a range on both sides of $50, suspended by the pull of heavy refining demand and the pressure from increased supply from Saudi Arabia and Iraq.
"We are in correction mode, and it's a bear market officially. There may be some short covering ... but it looks like another move lower is at hand, and the March lows are very much in focus," said John Kilduff, partner at Again Capital.