U.S. crude futures settled nearly flat Tuesday, holding close to four-month highs as traders awaited government data on U.S. oil and fuel supplies.
The U.S. Energy Information Administration is due to release its weekly oil-inventories report at 10:30 a.m. EST Wednesday. Analysts surveyed by Dow Jones Newswires expect stockpiles to rise by 2.2 million barrels, a turnaround from the 11.1-million-barrel drop in last week's report.
Most market watchers believe the sharp decline last week resulted from refineries cutting shipments before the end of the year to limit their tax burdens and stockpiles will rebound over the next few weeks. Still, investors are staying cautious, worried that an inventory surge could rattle the market after the latest rally.
"There is a lack of clarity on when the imports are going to return. We're staying a bit flat ahead of that," said Matt Smith, an analyst at Summit Energy.
Light, sweet crude for February delivery settled four cents lower at $93.15 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange rose 54 cents to $111.94 a barrel.
Futures have rallied 10% since hitting a recent low of $84.44 a barrel in early November. An improving outlook for U.S. and global economic growth has raised the possibility of improving fuel demand. Actions by the White House and Congress to avert sharp tax increases and spending cuts last week also provided a boost to equity and commodities markets.
But with prices nearing the high end of a trading range between roughly $85 and $95 a barrel, some investors are growing skittish about further gains.
Mark Waggoner, head of Excel Futures in Bend, Ore., expects prices to slump below $90 as oil and fuel supplies rebound. He said Wednesday's data could mark the end to oil's latest rally.
"I think you're going to see a big build across the board, and you're going to see the market get pummelled," Mr. Waggoner said.
The EIA is expected to show a 2.1-million-barrel increase in gasoline stockpiles. Stocks of distillate, which include heating oil and diesel, are seen rising by 1.4 million barrels.
The American Petroleum Institute, an industry group, said late Tuesday U.S. oil stockpiles rose by 2.362 million barrels last week. Gasoline stockpiles rose by 7.931 million barrels and distillate stockpiles rose by 5.854 million barrels.
Refinery runs fell to 88.9% from 90.5% last week, API said.
Earlier Tuesday, the EIA said in its monthly short-term energy outlook that oil consumption in developing countries, led by China, will top demand in the major industrialized nations for the first time ever in 2014. U.S. oil demand fell 1.6% to a 15-year low in 2012 and is forecast to rise by a modest 0.3% in both 2013 and 2014, the EIA said.
Front-month February reformulated gasoline blendstock, or RBOB, settled 1.70 cents higher at $2.7944 a gallon. February heating oil settled 0.9% higher at $3.0585 a gallon.
Copyright (c) 2012 Dow Jones & Company, Inc.
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