Traders await data on U.S. petroleum inventories, FOMC minutes
By Polya Lesova & Claudia Assis, MarketWatch
SAN FRANCISCO (MarketWatch) -- Oil prices edged higher Tuesday after finishing the prior session at the highest level since October 2008, as investors awaited data on petroleum inventories and the minutes from the latest meeting of the U.S. Federal Reserve.
Crude oil for May delivery gained 31 cents to $86.93 a barrel on the New York Mercantile Exchange. The contract earlier hit an intraday high of $86.85 a barrel in electronic trading.
"Oil continues to hold in there pretty well, momentum is still high ... the market tone seems to be intent on going on higher," said Kyle Cooper, managing director of IAF Advisors in Houston, Texas.
Equity markets and the dollar are the big drivers for oil, Cooper added.
Crude futures rose 2% on Monday to end at $86.62 a barrel on the New York Mercantile Exchange, their highest closing level since October 2008.
"We think that the oil-price increase is only of temporary nature, since it is driven by liquidity rather than by fundamental factors," said analysts at Commerzbank AG.
"The recent increase in correlation between oil prices and equity markets, which has now reached unprecedentedly high levels, underscores our view," they wrote in a note to clients.
U.S. stocks opened lower Tuesday after reaching 18-month highs Monday. The S&P 500 (SPX 1,184, -3.05, -0.26%) was down 0.3% and the Dow Jones Industrial Average (INDU 10,946, -27.82, -0.25%) lost 34 points, or 0.3%.
The American Petroleum Institute will report data on U.S. petroleum inventories on Tuesday afternoon. The Energy Information Administration will release a separate report on supplies on Wednesday morning.
Analysts polled by Dow Jones Newswires project an increase of 1.2 million barrels in crude inventories for the week ended April 2.
Traders are awaiting the release of the minutes from the March 16 meeting of the U.S. Federal Open Market Committee. They are due at 2 p.m. Eastern.
The stock market opened lower Tuesday following a two-day rise.
The dollar rose against its major rivals, limiting gains in energy prices. The dollar index (DXY 81.57, +0.47, +0.58%) , which tracks the performance of the greenback against a basket of other major currencies, rose 0.5% to 81.54 as the euro lost ground on renewed concerns about Greece and a planned aid package from the International Monetary Fund.
