MW: Crude futures on the mend, trade up more than 1%
Crude-oil futures made early gains Tuesday, as traders weighed the likelihood of further potential production cuts from the OPEC cartel and as as investors positioned Wall Street to open higher.
Crude for April delivery was last up 55 cents, or 1.4%, to $39 a barrel in electronic trading on Globex.
"Chances are high that OPEC will move again to put through more cuts when it next meets on March 15," said analysts at MF Global, referring to the Organization of the Petroleum Exporting Countries.
"For the short term, however, the weakness in the U.S. stock market is the 'big elephant in the room' and should continue to weigh on commodity sentiment," they said.
Algerian Energy Minister Chakib Khelil said on Sunday that OPEC's very likely to reduce output in March, according to media reports. Khelil formerly served as president of the cartel, which is scheduled to convene March 15 in Vienna.
OPEC has already agreed to cut cartel quotas by 4.2 million barrels a day since September, equivalent to about 5% of global oil demand.
Crude prices fell 4% on Monday, tracking big stock-market losses as investors cast doubt on the government's latest effort to shore up beleaguered U.S. banks.
On Wall Street, U.S. stock futures nudged higher Tuesday ahead of testimony from Federal Reserve Chairman Ben Bernanke, with traders waiting to see if the Fed chairman can shake markets out of the gloom.
Also on Tuesday, March reformulated gasoline rose 3 cents to $1.07 a gallon and March heating oil added 2 cents to $1.20 a gallon. Natural gas for March delivery gained 4 cents to stand at $4.13 per million British thermal units.
Supply data ahead
The Energy Information Administration will release data on U.S. petroleum supplies at 10:30 a.m. Eastern time on Wednesday.
Analysts surveyed by Platts expect an increase in crude inventories of 2.25 million barrels in the week ended Feb. 20. The analysts also expect a decline of 300,000 barrels in gasoline stocks as well as a drop of 1.8 million barrels in distillate stocks.
"Last week's 138,000-barrel decline in crude-oil inventories will likely be reversed in the latest reporting week by an expected rebound in crude imports and unchanged inputs levels," said Linda Rafield, a senior oil analyst at Platts, in a research note.
Separately, the American Petroleum Institute will release its weekly report on U.S. supplies on Tuesday afternoon. The API, a trade association of the oil and natural gas industry, calculates inventories based on different criteria from the Energy Department.
