By Myra P. Saefong and Kristene Quan, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures fell Tuesday, pulling back after a two-session climb as concerns over the conflict in the Middle East eased a bit and the dollar strengthened.
Crude oil for January delivery CLF3 -0.78% traded down 78 cents, or 0.9%, to $88.50 a barrel on the New York Mercantile Exchange.
The fall came after a nearly 4% climb in the contract over the past two trading sessions. Read: Oil nears $90 on Mideast woes, U.S. debt talks
“Geopolitical headlines will dominate the near-term movement in the energy markets,” said Tariq Zahir, managing member at Tyche Capital Advisors, given the ongoing situation with Israel and the rumors of a ground war.
News reports said President Barack Obama is sending Secretary of State Hillary Clinton to the Middle East in the hope that she can help broker a deal to end the conflict between Israel and Gaza. See: Hillary Clinton to travel to Middle East: reports.
“If a cease fire does happen, we do feel [oil] will give back some of the recent gains we have seen in the last couple of days,” said Zahir.
Traders will also be watching the Energy Information Administration petroleum supply numbers due out Wednesday, he said, “which we feel will come in with another build to continue to prove the case of weak fundamentals — strong supply, weak demand.”
The American Petroleum Institute will release its weekly data on petroleum supplies later Tuesday. The EIA’s report comes out Wednesday.
Analysts polled by Platts expect a 1 million-barrel increase in crude-oil supplies for the week ended Nov. 16. They also forecast a rise of 1.25 million barrels in gasoline inventories and a fall of 1 million barrels in distillate supplies, which include heating oil.
Heating oil for December delivery HOZ2 -0.02% was last up fractionally at $3.09 a gallon, and gasoline for delivery in the same month RBZ2 -0.70% fell 1 cent, or 0.5%, to $2.74 a gallon.
“With a shortened holiday week and data coming out [Wednesday] we are seeing very light volume and small price movements,” said Anthony Lazzara, chief executive of Lido Isle Advisors in Newport Beach, Calif.
Gains for the dollar also weighed on crude prices Tuesday, as the ICE dollar index DXY -0.13% , which measures the greenback against a basket of six other currencies, rose to 80.958, up from 80.854 in late North American trade Monday.
Dollar-denominated commodities such as crude oil tend to fall when the U.S. unit rises, as it makes oil more expensive to holders of other currencies.
Rounding out action in energy markets, natural-gas futures for December delivery NGZ12 +1.37% rose 5 cents, or 1.2% to $3.78 per million British thermal units.
The EIA will release its weekly natural-gas supply report on Wednesday, a day earlier due to Thursday’s Thanksgiving holiday. Prestige Economics expects to see a withdrawal of 27 billion cubic feet in last week’s inventories.
Myra Saefong is a MarketWatch reporter based in San Francisco.
Kristene Quan is a MarketWatch reporter, based in Hong Kong.
