MW: Oil falls on expectations for higher U.S. inventories
Crude-oil futures moved lower Tuesday, falling from their highest level in nearly four months on expectations that data will show U.S. crude inventories rose last week as demand declined.
The Energy Information Administration is scheduled to release its weekly petroleum report on Wednesday. Analysts surveyed by energy-information provider Platts expect the nation's crude inventories to have risen 1.4 million barrels in the week ended March 20.
"Crude prices were lower amid profit taking prompted by concerns we could see further builds in U.S. inventories due to sliding demand," wrote Nimit Khamar, analyst at Sucden Financial Research.
Crude for May delivery fell 69 cents, or 1.3%, to $53.11 a barrel on the New York Mercantile Exchange. It dropped to $52.45 earlier. On the previous session, oil closed at $53.80, the highest closing price for a front-month contract since Nov. 28.
On the petroleum products side, analysts surveyed by Platts expect declines in stockpiles, pegging gasoline stocks as having declined by 900,000 barrels and distillate stocks as coming in 200,000 barrels lower.
On the Nymex, April reformulated gasoline rose 1.2% to $1.5055 a gallon and April heating oil gained 0.2% to $1.4736 a gallon. April natural-gas futures were almost flat at $4.303 per million British thermal units.
Last week, the EIA reported an increase of 2 million barrels in crude inventories in the week ended March 13. Gasoline inventories rose by 3.2 million barrels, while distillate stockpiles, which include diesel and heating oil, rose by 100,000 barrels.
In Monday's trading, crude rallied more than 3%, pacing big gains in U.S. stocks, as the Treasury's plans to relieve banks of toxic assets raised hopes of an economic recovery and increased energy demand.
Monday's rally in U.S. stocks capped their biggest two-week advance since 1938. At Monday's close, crude had rallied 20% so far this month.
Edward Meir, an analyst at MF Global, called Monday's gains in commodities and stocks "phenomenal" and "spectacular."
But some analysts said there were likely downward pressures ahead for crude prices.
While the Treasury's measures "are positive, a lot of uncertainty remains over how quick and how effective these measures will be," wrote Sucden's Khamar. "Oil fundamentals are still far from rosy and oil inventories are still at elevated levels."
"Demand is still weakening and once focus switches back to the current oil fundamental picture, crude prices could once again come under pressure," Khamar added.
