Tuesday, June 28, 2011
By Claudia Assis and Sarah Turner, MarketWatch
SAN FRANCISCO (MarketWatch) — Oil futures edged higher on Tuesday as investors anticipated a decrease in U.S. weekly inventories and saw a glimmer of hope in the housing sector and a higher U.S. stock market.
Crude for August delivery /quotes/zigman/2075824 CL1Q +1.05% rose 50 cents, or 0.6%, to $91.15 on the New York Mercantile Exchange. Oil settled at its lowest settlement in four months in the previous session. Read more on Monday's oil move.
Worries about future demand for oil amid signs of softening economic growth, as well as oversupply concerns in the wake of an emergency release of oil from member countries of the International Energy Agency, have pressured oil prices in recent sessions.
“There’s a lot of uncertainty at the moment, but the two major things are the euro zone and the future of the US economy after (the second round of quantitative easing)”, said Alexander Poejel with JBC Energy.
Meanwhile, the IEA move came under criticism from the Organization of the Petroleum Exporting Countries.
OPEC Secretary General Abdalla El-Badri said late Monday after a meeting between OPEC and European Union officials he saw “no reason“ for the release since there was no emergency.
Closer to home, the S&P/Case-Shiller index rose 0.7% in April, paring its on-year decline to 4%. Read more about the housing index.
Europe’s benchmark Brent crude futures also traded higher, with the August contract rising $1.95 to $107.95 a barrel on ICE Futures London.
Still, analysts were of the view that oil prices have further to fall.
“We continue to believe that the short-term bias in most commodity complexes will be lower still, although the rate of decline may start to flatten out as prices start approach more reasonable valuations,” they said.
Investors get a first glimpse of oil inventories later Tuesday, when The American Petroleum Institute releases its weekly data on supplies. That precedes the more closely followed report from the Department of Energy due Wednesday.
Analysts polled by Platts expect both reports to show crude oil stocks down 1.7 million barrels, gasoline inventories up 700,000 barrels, and distillates stocks up 1.8 million barrels.