Crude-Oil Futures Gain Ahead of Weekly Inventory Data

U.S. crude-oil prices rebounded from early losses Tuesday to finish higher, as gains in equities markets provided an optimistic outlook on the broader economy.

May-delivery light, sweet crude-oil futures on the New York Mercantile Exchange settled 84 cents, or 0.9%, higher at $94.20 a barrel, after falling as low as $92.86 a barrel earlier in the session.

ICE May North Sea Brent crude oil futures rose $1.57 to $106.23 a barrel, after dipping as low as $104.27 a barrel.

Analysts and investors said the price rebound was due in part to gains in the stock market, with the Standard & Poor's 500 index rose 0.4%. Also, traders that had wagered correctly on falling prices over the past week were looking to close out bets and lock in profits.

"This is a lot of people taking profits right now," said Dominick Chirichella, an analyst at the Energy Management Institute.

Before Tuesday's gains, U.S. oil prices had fallen 4% this month, while Brent crude was down 5.1%, amid rising supplies and concerns about slumping fuel demand.

On Tuesday, the U.S. Energy Information Administration said domestic gasoline demand in the peak spring-summer driving season will slip to a 12-year low of 8.877 million barrels a day this year.

Traders said crude oil has also been under pressure from expectations of a further increase in U.S. inventories, which stand at their highest level since July 1990.

On Wednesday, the U.S. Energy Information Administration is due to report weekly stockpiles data. Analysts expect crude-oil stockpiles to increase by 1.2 million barrels, according to a Dow Jones Newswires survey of analysts.

Gasoline stockpiles are seen falling by 1 million barrels, while stocks of distillate, which include heating oil and diesel, are seen falling by 1.2 million barrels.

The EIA data are due at 10:30 a.m. EDT (1430 GMT) Wednesday. The American Petroleum Institute, an industry group, is due to release its own inventory report late Tuesday.

Analysts said the market will also be looking to the Wednesday afternoon release of minutes from the latest meeting of the Fed's policy-making board, the Federal Open Market Committee, for direction on monetary policy.

"The rhetoric that has been coming out suggests continued bond-buying [activity by the Fed]," said Carl Larry, head of trading newsletter Oil Outlooks and Opinions. "We're not expecting anything too shocking."

Front-month May reformulated gasoline blendstock, or RBOB, settled 3.31 cents, or 1.1%, higher at $2.9424 a gallon. May heating oil settled 0.76 cent higher at $2.9613 a gallon.

Copyright (c) 2012 Dow Jones & Company, Inc.


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Brent Crude Oil : $51.38/BBL 2.44%
Light Crude Oil : $50.43/BBL 2.26%
Natural Gas : $3.14/MMBtu 0.94%
Updated in last 24 hours