U.S. crude-oil futures pared early losses Wednesday after weekly government data showed a smaller increase in crude-oil stockpiles than many analysts were anticipating.
U.S. crude-oil inventories rose 2.6 million barrels last week, according to the U.S. Energy Information Administration, below the 2.9-million-barrel increase forecast in a Dow Jones Newswires survey of analysts.
Additionally, stockpiles in Cushing, Okla., fell by 300,000 barrels, offering evidence that the supply glut at the key transit hub is slowly dissipating.
Light, sweet crude oil for March delivery recently traded 30 cents lower at $96.34 a barrel on the New York Mercantile Exchange, after trading as low as $95.04 a barrel earlier in the session. Brent crude oil on the ICE futures exchange traded 19 cents lower at $116.33 a barrel.
Market watchers said the bounce Wednesday following the data reflected a move by traders to lock in profits on bearish bets. While the decline in Cushing stockpiles raised some hopes for an end to the supply glut, other indicators in the weekly report signalled that rising U.S. production is keeping domestic supplies robust, which should translate into lower prices.
Gasoline stockpiles increased by 1.7 million barrels, well above the 900,000-barrel increase analysts had forecast. In addition, oil imports fell 6.2% last week as refineries continued to seek cheaper, domestic oil in place of more expensive barrel from overseas.
Tim Evans, an energy analyst at Citi Futures Perspective, said an increase in East Coast gasoline stockpiles, coupled with falling imports, could keep a lid on any gains.
"The U.S. refineries don't need it, so we're keeping the oil offshore," Mr. Evans said. "You can almost squint real hard and see the tankers loading up in Nigeria turning towards Europe rather than the U.S."
Still, oil prices remain under pressure as a result of a strengthening dollar, which can push down futures by making oil more expensive for buyers in other currencies. European markets saw broad declines Wednesday, which sent the euro lower against the dollar. The euro was recently trading 0.4% lower at $1.3537 compared to Tuesday.
"It's a general risk-off scenario. The dollar is up and risk assets are down," said Bob Yawger, director of energy futures at Mizuho.
The Dow Jones Industrial Average was recently down 0.1% to 13968.
Front-month March reformulated gasoline blendstock, or RBOB, recently traded 1.33 cents lower at $3.0241 a gallon. March heating oil recently traded 0.51 cent lower at $3.1862 a gallon.
Copyright (c) 2012 Dow Jones & Company, Inc.
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