WSJ: Crude Declines, Pressured By Rising Inventories
By Brian Baskin
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Crude futures sank Thursday, retreating from recent highs as swelling oil inventories and a growing aversion to risk among investors kept buyers out of the market.
Light, sweet crude for May delivery traded $1.25, or 1.4%, lower at $84.63 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded $1.08, or 1.3%, lower at $84.51 a barrel.
Equities and the dollar continue to undermine support for higher oil prices, after crude futures had hit their highest point since October 2008 on Tuesday. Greece's debt crisis is rattling investors who had focused over the last two weeks on improvements in the U.S. economic picture. The yield on Greece's bonds continued to climb, signaling growing concern that the country will be unable to pay back its debts.
Each time Greece's financial situation has flared up this year, investors have responded by removing assets from riskier markets, such as commodities and equities, in favor of the dollar. On Thursday, U.S. stock futures indicate a lower opening, while the dollar strengthened to $1.3321 recently against the euro, from $1.3348 earlier.
The oil rally has proven strong enough to weather a stronger dollar or falling equities, but not both, said Jim Ritterbusch, president of the trading advisory firm Ritterbusch and Assoc. A stronger dollar makes oil more expensive to buy using other currencies.
"Although the oil complex has been able to fend off a bearish currency factor with the assistance of a strong stock market, the equity rally is also beginning to stall," he wrote in a note to clients.
The oil market may also have trouble holding onto recent gains after another government report showing an increase in U.S. oil and fuel stockpiles. The U.S. Energy Information Administration said Wednesday that crude inventories rose by 2 million barrels, the 10th consecutive build.
Gasoline inventories fell by more than expected, but a sharp increase in refinery utilization indicates that supplies are likely to stay high into the summer, said Peter Beutel, president of the trading advisory firm Cameron Hanover.
Front-month May reformulated gasoline blendstock, or RBOB, recently traded 5.03 cents, or 2.2%, lower at $2.2644 a gallon. May heating oil traded 2.42 cents, or 1.1%, lower at $2.2197 a gallon.
-By Brian Baskin, Dow Jones Newswires; 212-416-2453; brian.baskin@dowjones.com.
