Ahead of API Data, crude futures at NYMEX pared their losses to end modestly lower Tuesday, as traders braced for what was expected to be a hefty build in U.S. crude inventories.
April crude, which had fallen as low as $27.72 at one point, closed at $28.20 a barrel, down 30 cents. March heating oil, down at 74.10 cents a gallon earlier, closed at 75.00 cents, a loss of 7 points.
March gasoline lost 15 points to 84.30 cents but not before trading as low as 82.75 cents a gallon. Forward products futures contracts ended in the black. Final settlements weren't in yet. According to Dow Jones.
The early losses came amid expectations that weekly inventory data from the American Petroleum Institute and the U.S. Department of Energy will show a substantial increase in crude stocks after last week's unexpectedly large drawdown. Dow Jones wrote.
Energy analysts surveyed by Dow Jones Newswires earlier Tuesday expect the data to show an increase of 5 million barrels in crude inventories in the past week. The API report, covering the week ended Feb. 23, is slated for release after the close of trading Tuesday.
Last week's API report showed a decline of more than 12 million barrels in crude stocks, pushing inventories to their lowest level in a quarter century.
It was the largest weekly inventory draw reported by the API since January 1999. But API and DOE officials later explained that heavy fog on the U.S. Gulf Coast prevented oil tankers from unloading, causing the sharp decline in inventories.
Analysts said a large inventory build was by no means a given, noting that it is not unusual for the API to report a large stock decline one week and to show only a modest build the following week. That perception forced some short-covering, analysts said.
"There is a lot of nervousness about the API's," an analyst said. "The expectations are very high. It is real easy to disappoint."
There was also uncertainty in the market over what action, if any, the Organization of Petroleum Exporting Countries will take when it meets next month.
Although analysts are split on whether OPEC needs to cut output to keep prices within its target range, recent comments by top OPEC officials suggest that the cartel will leave quotas unchanged if prices remain steady.
That attitude, of course, could change in the weeks ahead, but it is exerting further downward pressure on prices.
© 2001 Mena Report (www.menareport.com)
