Curse the fickle nature of the market! On Tuesday, U.S. crude oil futures whimpered to a close, as investors, blinded by foreboding shadow, fretted over demand deficiencies rather than the burgeoning threat of supply disruptions from escalating tensions in the Middle East.

The Dollar Gains and Sentiments Sour

The jaunty jump of the U.S. dollar to a one-month high heaped yet more pressure on oil prices, as investors curbed their enthusiasm for an interest rate cut by the Federal Reserve in March. If that wasn’t enough, the New York Federal Reserve darkened moods further by reporting a harrowing 29.2-point plunge in its Empire State business conditions index to a negative 43.7.

Weather Forecasts: A Twist of Misery

As if that weren’t sufficient to cast a pall, the latest weather forecasts for the U.S. Lower 48 states portended a shift from colder-than-normal temps this week to mostly warmer weather next week. The prospect of warmth, though pleasant in most circumstances, now loomed as a threat to demand for heating oil, delivering yet another blow to the already beleaguered commodity’s prospects.

Front-month Nymex crude (CL1:COM) for February delivery sagged to $72.40 per barrel, a decline of 0.4%, relinquishing early gains, while front-month March Brent crude (CO1:COM) managed to eke out a gain of 0.2%, closing at $78.29 per barrel.

It seems the increased tensions in the Middle East have indeed posed supply risks for crude oil and liquefied natural gas. Yet, so far, there is little fundamental impact on supply to be found, as ING analysts Ewa Manthey and Warren Patterson were quick to point out. “In order to see oil prices breaking significantly higher, we will need to see even further escalation and/or a meaningful loss in oil supply,” they opined.

Such stoic disregard to intensifying tumult in the Middle East did not escape the notice of Vanda Insights founder Vandana Hart, who remarked, “Crude’s continued disregard to the latest spurt in Middle East tensions does seem a bit surprising. It’s an indication of the extent to which the view on global oil fundamentals has turned bleaker,” in conversation with Bloomberg.

Troubled Waters in North Dakota

Adding to the woes, more than half of oil production from North Dakota found itself forcibly shackled by freezing temperatures, with as much as 650,000 barrels per day offline, a significant escalation from the 425,000 barrels per day reported on Monday, according to the North Dakota Pipeline Authority. North Dakota, the third largest U.S. oil-producing state, had witnessed output hitting a robust 1.27 million barrels per day back in October.