Nymex Crude Slumps as Traders Flee Rising Fuel Stockpiles
Crude-oil futures fell Tuesday, pulled lower by a slumping market for gasoline futures as traders worry about high fuel supplies.
Gasoline futures have fallen by 3.7% this year, and analysts expect U.S. gasoline stockpiles will rise to the highest level on record for this time of year when the U.S. Energy Information Administration reports data Wednesday on weekly oil and fuel inventories.
Gasoline stockpiles are seen rising by 2.3 million barrels, according to a Dow Jones Newswires survey. If the estimate is correct, gasoline stockpiles will have increased for eight-straight weeks.
The expected supply increase, which comes amid slumping demand for the fuel, helped push gasoline futures down 1.7% Tuesday, and is starting to hit the crude-oil market as traders worry that lower prices will prompt refineries to cut back on production, leading to lower oil demand.
"The market expects that gasoline may build again tomorrow, and that's weighing on crude," said Andy Lipow, president of energy-consulting firm Lipow Oil Associates.
Light, sweet crude for February delivery settled 86 cents, or 0.9%, lower at $93.28 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange fell 1.4% to $110.30 a barrel.
Oil prices fell from nearly four-month highs notched Monday, and traders said that rising oil and fuel supplies, coupled with worries about tepid economic growth, have prevented futures from holding above $94 a barrel.
U.S. crude-oil stockpiles are also expected in rise when the EIA reports data Wednesday. Analysts expect stocks to increase by 2.1 million barrels. Stocks of distillate, which include heating oil and diesel, are seen rising 1.3 million barrels.
"Inventories are ample, and that doesn't attract buyers right now," said Walter Zimmermann, chief technical analyst at brokerage United-ICAP.
Front-month February reformulated gasoline blendstock, or RBOB, settled 4.75 cents lower at $2.7066 a gallon. February heating oil settled 5.12 cents, or 1.7%, lower at $3.0113 a gallon.
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