MW: Oil turns lower after disappointing supply data
By Claudia Assis and Michael Kitchen, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures turned lower Wednesday after a weekly government report showed a higher-than-expected increase in crude inventories.
Crude for June delivery CLM2 -0.10% retreated 38 cents, or 0.4%, at $103.17 a barrel on the New York Mercantile Exchange. Prices had traded around $103.85 before the report, and on Tuesday had settled at their highest in a week.
The Energy Information Administration reported an increase of 4 million barrels in crude supplies for the week ended April 20. Analysts polled by Platts had expected an increase of 1.5 million barrels.
The EIA also reported gasoline inventories down 2.2 million barrels in the week, and stockpiles of distillates down 3.1 million barrels.
That contrasts with analyst expectations of a decline of 500,000 barrels for gasoline and an increase of 80,000 barrels for distillates.
Demand for oil and other energy products continues to be weak, a tad lower on the week and down 3.2% on the year, according to Tim Evans, an analyst with Citigroup’s Citi Futures Perspective.
May gasoline RBK2 -0.98% added to losses after the data, slipping 4 cents, or 1.1%, to $3.12 a gallon. Heating oil for the same month HOK2 +0.19% turned lower, off less than a cent to $3.13 a gallon.
May natural gas NGK12 +1.37% added 3 cents, or 1.5%, to $2 per million British thermal units. The EIA is scheduled to report on natural-gas inventories on Thursday.
Oil squandered its early gains on positive market sentiment. U.S. stocks opened higher, buoyed by better-than-expected earnings from Apple Inc. AAPL +8.97% .
Later in the session the Federal Reserve will release its decision on interest rates and Fed Chairman Ben Bernanke will speak at a news conference. Read more about the Fed meeting.
Long term, Citi analysts said market sentiment toward crude and the wider petroleum market is “robustly bullish.”
“Our base case assumptions for the second half of the year include both stronger seasonal demand and lower [Organization of Petroleum Exporting Countries] production,” they said.
“This would be consistent with either a scenario where Iranian production declines moderately, or one where Iranian production stabilizes but other OPEC production is reduced to help limit a drop in price on an easing of tensions,” Citi said.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
Michael Kitchen is Asia editor for MarketWatch and is based in Los Angeles.
