MW: Oil falls first day in five on inventories expectations
Crude-oil futures fell Tuesday for the first session in five, pulling back from their highest level in more than five months on expectations that U.S. crude inventories have risen from their 19-year high last week.
The Energy Information Administration is scheduled to release the latest U.S. petroleum inventories Wednesday. Analysts surveyed by Platts expect a buildup of 2.2 million barrels. Limiting crude's losses, Federal Reserve Chairman Ben Bernanke said the U.S. economy is bottoming out.
"While economic indicators are continuing to look less bad, oil fundamentals are still looking far from rosy," said Nimit Khamar, an analyst at Sucden Financial Research, in a note. "The fact remains there is still a large amount of crude inventories around and oil demand is continuing to fall."
Crude for June delivery was last down 34 cents, or 0.6%, to $54.13 a barrel on the New York Mercantile Exchange. It fell 1.4% to $53.70 earlier. Oil had ended at the highest level since Nov. 24 on Monday on economic recovery hopes.
The EIA last week reported that crude inventories stood at 374.7 million barrels in the week ended April 24, the highest level since September 1990. The agency also reported that U.S. refineries reduced their production in the face of weak demand.
For Wednesday's report, analysts surveyed by Platts also expect a buildup of 750,000 barrels in gasoline inventories and a 690,000 increase in distillate inventories, which include heating oil and diesel.
The U.S. economy will turn up later this year and inflation will remain low, Bernanke said in a testimony before Congress. He also said conditions in financial markets have improved and a gradual repair of the banking system is under way.
In other economic news, U.S. service-producing industries contracted again in April for the seventh straight month, but at a slower pace than in March, according to the Institute for Supply Management index released Tuesday.
Also in energy trading, June reformulated gasoline fell slightly to $1.5855 a gallon and June heating oil lost 1 cent, or 0.7, to $1.4248 a gallon.
Natural gas for June delivery slid 7.2 cents, or 1.9%, to $3.652 per million British thermal units.
