Wednesday, April 6, 2011

OIL FUTURES: Crude Futures Edge Higher Ahead Of US Supply Data


NEW YORK (Dow Jones)--Oil futures edged higher Wednesday, as fighting continued in Libya and traders awaited cues from the U.S. government on oil and fuel inventory levels.

Light, sweet crude for May delivery rose 21 cents, or 0.2%, to $108.55 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange gained 57 cents, or 0.5%, to $122.79 a barrel.

Traders avoided placing big trades ahead of the U.S. Department of Energy's closely watched report on oil and fuel product inventories due at 10:30 a.m. EDT. Analysts are bracing for the fifth straight week of higher oil stockpiles, a signal that the U.S. remains well supplied despite the disruption of exports from Libya.

"We're hoping we'll get some action from the DOEs and get some movement there," said Carl Larry, head of the Houston-based oil trading advisory firm Oil Outlooks and Opinions LLC. "We're stuck in this level--people are afraid to go long because they're afraid there's no upside, but they're afraid to go short because something could happen in the Middle East."

Oil stocks in the U.S. have risen more than 20 million barrels since the beginning of the year, according to the DOE's Energy Information Administration. Analysts expect crude stocks for the week ended Friday rose 1.6 million barrels, according to a Dow Jones Newswires survey. Stocks of gasoline are seen falling 1.7 million barrels, while supplies of distillates, including heating oil and diesel, fell 300,000 barrels. Refinery utilization is seen climbing 0.6 percentage point to 84.7% of capacity.

The American Petroleum Institute, an industry group, said Tuesday that crude stocks fell 2.8 million barrels last week. Gasoline stocks rose 568,000 barrels, while stocks of distillates fell 1 million barrels.

Market participants will pay particular attention to inventory levels at Cushing, Okla., the delivery point for the Nymex's West Texas Intermediate contract. Record-high stockpiles at the town have kept WTI trading at a steep discount to Brent crude--the contract used widely in Europe--in recent months.

The differential rose above $14 a barrel Wednesday. Typically the two contracts trade within a $1 of each other. On Tuesday, fighting in Libya caused traders to bid up the Brent contract, while elevated Cushing stocks kept WTI under pressure.

Despite the civil war in Libya, some oil exports have resumed from the country, Didier Houssain, director of energy supply and markets at the International Energy Agency, told Dow Jones Newswires. However, the fighting continues to cause a "significant disruption to its oil supply," he said Wednesday.

"There is little cause for optimism as the rebels only control around 110,000 barrels a day of crude production and continue to cede ground to (Col. Moammar) Gadhafi troops," JBC Energy analysts said in a report.

However, the rebels' recent victory in Brega, an important oil town that has changed hands several times since the civil war began in mid-February, could prove a source of revenue for the cash-starved rebels.

Meanwhile, shipping industry data provider Lloyd's Intelligence said a tanker looking to load oil for export was traveling to the rebel-held port of Marsa el-Hariga on Tuesday, the Associated Press reported.

Front-month May reformulated gasoline blendstock, or RBOB, recently fell 0.45 cent, or 0.1%, to $3.1968 a gallon. May heating oil gained 1.88 cents, or 0.6%, to $3.2038 a gallon.

-By Dan Strumpf, Dow Jones Newswires; 212-416-2818;

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