MW: Crude Trades Flat Amid Talk of Stockpile Release
By CHRISTIAN BERTHELSEN
NEW YORKâOil futures were trading around the break-even point in early trading Thursday, as continued talk of a release of strategic oil reserves weighed on a market already facing weakening supply-and-demand fundamentals.
Futures fell overnight but clawed back in the early morning hours. Light, sweet crude for May delivery was down five cents at $105.36 a barrel on the New York Mercantile Exchange. Brent crude on the ICE Futures Europe exchange was up 16 cents, or 0.1%, at $124.32 a barrel.
Market chatter about a release of strategic petroleum reserves continued to make the rounds Thursday. A day earlier, France became the third nation to begin talk of such a release after the U.S. and U.K. raised the possibility.
"We believe a release of some sort is highly likely in the coming months," Barclays BARC.LN -3.95% said in a note, though the firm added it believed such an event has already been priced into the market and was merely keeping prices from running higher.
Data released Wednesday by the Department of Energy showed crude-oil stockpiles rose by 7.1 million barrels last week, far more than the 2.2 million expected by analysts, leaving inventories at a seven-month high.
Other factors also weighed on the market. Oil's decline followed European stock markets and the euro after the European Commission's economic sentiment indicator for the euro-zone fell unexpectedly, renewing worries about an economic slowdown in Europe that would weaken demand.
In the U.S., equity markets opened lower after weekly initial jobless claims came in higher than expected and fourth-quarter 2011 GDP was left unrevised at 3%, lower than analyst expectations of 3.2%. For the full year, the economy grew at a rate of 1.7%, down from the 3% rate of expansion in 2010.
Oil prices have traded in a narrow band between about $105 and $110 a barrel in recent weeks, held there by conflicting thrusts in the market. Though many traders and analysts say a push lower is warranted given weakening supply-and-demand fundamentals, the spectre of conflict with Iran has made traders reluctant to sell.
Front-month April reformulated gasoline blendstock, or RBOB, recently rose 4.55 cents to $3.4410 a gallon. April heating oil rose 1.41 cents to $3.2220 a gallon.
