Oil gives back gains as stocks tumble

NEW YORK (CNNMoney.com) -- Oil prices ended slightly lower Thursday, giving back earlier gains, as a selloff on Wall Street put traders on edge and the dollar strengthened.

What prices are doing: Light, sweet crude for March delivery fell 3 cents to settle at $73.64 a barrel.

What's moving the market: Stocks tumbled in afternoon trading following mixed economic reports and disappointing sales and profit forecasts in the technology sector. Warnings in the chip and telecom sectors increased investor jitters in the aftermath of last week's big decline.

Oil traders view the stock market as a leading indicator of economic growth and potential energy demand. As a result, oil prices often fall in tandem with the major stock indexes.

Concerns about the economy were also fueled by a mixed report on the job market.

The Labor Department said there were 470,000 initial job claims filed in the week ended Jan. 23, down 8,000 from a revised 478,000 the previous week.

But the report also showed that the 4-week moving average of initial claims rose by 9,500 to 456,250, suggesting the job market remains weak.

The report came one day after President Obama called on Congress to pass legislation aimed at spurring job growth.

Oil prices were also pressured by a stronger dollar, which rose as investors flocked to the U.S. currency for safety. A stronger dollar typically weighs on commodities, such as oil, that are priced in the U.S. currency.

Meanwhile, traders continue to digest Wednesday's inventory report from the Energy Information Administration.

The EIA report showed that U.S. supplies of crude oil fell by 3.9 billion barrels, while gasoline and distillate supplies rose. It also showed that oil imports and refinery utilization remain at historic lows, reflecting sluggish energy demand.

"We continue to see demand going nowhere, if not getting worse," said Peter Beutel, president of trading firm Cameron Hanover in Connecticut.

Looking ahead, the government is expected to report Friday that U.S. gross domestic product rose at a 4.6% annual rate in the fourth quarter after growing at a 2.2% rate in the third quarter.

What analysts are saying: "The oil market has traded poorly in the past two weeks, and rightly so, given the poor fundamental backdrop," analysts at MF Global wrote in a research report.

The report said oil prices could fall further in the weeks ahead as the dollar continues to strengthen following the Jan. 19 election of Scott Brown, R-Mass., to the U.S. Senate.

"The election has caused a slight shift toward the center by President Obama," the MF Global report said. "The shift toward the center will create restrictions on government deficit spending, and keep the dollar in an upward path."