Wednesday, 18 March 2015 01:50
NEW YORK: Oil prices fell on Tuesday, pressured by expectations of a 10th week of record highs in US crude inventories as trade remained volatile from a weaker dollar and short-covering after three days of price drops.
Traders and investors forecast that crude stocks in the United States rose by 3.8 million barrels last week to nearly 453 million, an updated Reuters poll showed.
That would be the biggest domestic stockpile in at least 80 years.
The American Petroleum Institute (API), an industry group, will issue its weekly inventory report at 4:30 p.m. EDT (2030 GMT), ahead of Wednesday’s official data from the US Energy Information Administration.
Also pressuring prices was rising output in Libya and Iran’s eagerness to export more oil once it clinches a nuclear deal that would remove Western sanctions, traders said. Benchmark Brent oil slipped almost 90 cents early in the session, then pared some losses to stand at $ 53.11 a barrel by 1:49 p.m. EDT (1749 GMT), down 33 cents from Monday.
Brent last closed higher on March 11. Since then, it has lost more than 7 percent, and traders believe it will break below $ 50.
US crude was at $ 43.83 a barrel, down 5 cents. Technical charts show brittle support for US crude at above $ 40, suggesting it could fall to between $ 37 and $ 32.
News that a refinery in Port Arthur, Texas, had begun the start up process for a unit under maintenance helped US crude pare losses. Run by Motiva, the refinery has a capacity to handle 600,250 barrels of crude per day.
The market’s downside was also limited by a weaker dollar to the euro that made commodities denominated in the greenback more appealing to holders of the single currency.
“All indications are there’s too much oil in the United States, and it’s growing, and that should drive prices lower,” said Sal Umek at the Energy Management Institute in New York. “Still, after these many days of losses, we could see some profit-taking by the bears, or some short-covering that could lift the market, particularly if the API numbers surprise to the upside.”
Adding volatility to Tuesday’s oil markets was position squaring ahead of the expiry of options in US crude. “You’re getting a little crazy action today because options are expiring,” said Tariq Zahir, managing partner at Tyche Capital Advisors in Laurel Hollow in New York.
Copyright Reuters, 2015