MW: Oil slips on bets for a rebound in U.S. supplies
By Myra P. Saefong and Sara Sjolin, MarketWatch
SAN FRANCISCO (MarketWatch) — Oil futures edged lower Monday as traders bet on a rebound in U.S. crude supplies after data last week showed a hefty year-end inventory decline.
The market also looked toward this week’s start of the corporate earnings season for hints on oil demand. See: Tech, bank forecasts slashed in run-up to earnings.
Crude-oil for February delivery CLG3 +0.22% gave up 27 cents, or 0.3%, to $92.82 a barrel on the New York Mercantile Exchange.
The weakness came after the contract ended 2.5% higher last week, on the back of a significant drop in crude supplies in the U.S. and relief that the nation’s policy makers reached an agreement to avert the fiscal cliff.
The U.S. Energy Information Administration on Friday reported that crude supplies for the week ended Dec. 28 fell by a much more-than-expected 11 million barrels. The report had been delayed by two days because of the New Year’s Day holiday. Analysts said the supply drop was due to end-of-year tax considerations. See Friday’s column: Oil futures end above $93, gain for the week.
“We should see supply rebound big time this week,” said Phil Flynn, senior market analyst at Price Futures Group, in a note. “Even with the drop in supply, U.S. crude stocks stand at 359.9 million barrels — which is well above the five-year average and near record supply in Cushing, Okla.,” the delivery point for Nymex oil futures.
Flynn expects data this week, covering the week ended Jan. 4, to show a climb of 5 million barrels in crude supplies. The American Petroleum Institute will post its inventory report on Tuesday evening, while the EIA will release its own report Wednesday morning.
The EIA is also scheduled to released its monthly Short-term Energy Outlook report Tuesday.
Elsewhere in the energy complex, natural gas was a standout, heading higher after last week’s more than 5% price drop.
February natural gas gained 5 cents, or 1.4%, to $3.33 per million British thermal units.
Gasoline for February delivery RBG3 +0.22% fell 1 cent, or 0.5%, to $2.75 a gallon, while heating oil for the same month HOG3 +0.69% was nearly flat at $3.02 a gallon.
Myra Saefong is a MarketWatch reporter based in San Francisco. Follow her on Twitter @MktwSaefong.
Sara Sjolin is a MarketWatch reporter based in London. Follow her on Twitter @sarasjolin.
