Oil Futures In NY End Lower As Market Eyes Supply
(Adds broker quotes and analysis on gasoline decline and April's consumer
confidence reading. Updates with Nymex and IPE price-settlement tables.)
NEW YORK (Dow Jones)--Crude-oil futures in New York settled lower Tuesday,
but ended exactly where they finished overnight, as traders weighed the
prospects of another increase in U.S. oil supplies.
Energy analysts expect commercial crude inventories to rise an estimated
310,000 barrels in government data due out Wednesday. That would mark the 10th
climb in 11 weeks, leaving oil inventories at the upper end of the average
range for this time of year.
Gasoline stocks are expected to fall an estimated 480,000 bbls, analysts say,
while distillate stocks and U.S. refinery rates likely will remain unchanged.
Distillate inventories include diesel fuel and heating oil.
Benchmark light, sweet crude futures for June settled down 37 cents at $54.20
a barrel, after dropping as much as $1.22 on expectations of rising petroleum
supplies.
On London's International Petroleum Exchange, June Brent blend crude futures
settled down 26 cents at $54.14/bbl, paring earlier declines of about a dollar.
The volatility spooked a number of traders Tuesday, many of whom expected
near-term weakness in the market, tempered by suspicions that oil prices may
eventually test their $58.28 record high of April 4.
"A lot of people aren't trading," said one New York-based commodities trader.
"You have to be prepared to watch this market move up or down $2 within any
broader move."
With traders of all stripes smarting from two weeks of sharp price swings,
the trader said uncertainty is becoming a market mainstay.
"No one knows where this thing is headed," he said. "But if I had to make a
bet, it would be lower."
Members of the Organization of Petroleum Exporting Countries continued to
characterize the oil market as well-supplied Tuesday, with oil ministers from
Iran and the United Arab Emirates backing Saudi comments Monday of adequate
global supplies.
Iranian Oil Minister Bijan Namdar Zangeneh even went so far as to say the
market could be "oversupplied."
Indeed, a glut of barrels in the physical market has put a damper on oil
prices. And while Saudi Arabia has pledged to supply as much oil as the market
needs, most customers have turned away additional barrels.
That means OPEC, which pumps more than a third of the world's oil, appears to
have no reason to loosen its spigots.
Also weighing on oil prices Tuesday were losses in Nymex product futures,
with gasoline futures leading the way.
Nymex gasoline futures for May fell 2.56 cents to $1.6251 a gallon - besting
the decline in out-of-season Nymex heating oil futures, which fell 1.02 cents
to settle at $1.5079 a gallon in May.
On the IPE, gasoil prices for May settled down $476.50 a metric ton, down
$17.25.
Nymex gasoline prices caved, as traders switched from fretting over further
upticks in demand to worrying about possible demand destruction.
"Earlier in the year, it seemed like consumers were unbreakable when it came
to high prices," says Phil Flynn, a broker for Alaron Trading Corp. in Chicago.
"The jury is still out, but now there's concern that consumers are really
feeling the pinch of higher gasoline prices."
Sunday's Lundberg Survey reflected those worries, indicating retail gasoline
prices and demand both fell in past two weeks. That points to the first
significant price drop this year.
Moreover, a chorus of analysts said Tuesday that high energy prices likely
were to blame for a weaker-than-expected April consumer confidence report.
The Conference Board posted a 97.7 reading for this month - below the 98
analysts had expected and the lowest since November.
Flynn said the darkening mood of consumers could presage a drop in overall
energy demand, but added that "lower consumer confidence doesn't necessarily
translate into lower energy demand." |
