Canadian Oil-Sands Exporters Expand In US Gulf Market: US Market is growing!!!!!

By Edward Welsch
Of DOW JONES NEWSWIRES
OTTAWA (Dow Jones)--Canadian producers of crude from oil sands are making a big push into the U.S. Gulf Coast market, where refiners are paying the highest prices in decades for low quality, high-sulfur oil.

Historically, Canadian high-sulfur, or "heavy," crude, shipped by long-distance pipeline, has struggled to compete against cheaper, seaborne shipments of oil from Mexico, Saudi Arabia and Venezuela. But Mexico's heavy-crude output is declining and Venezuelan exports of the stuff to the U.S. have dropped amid a rocky political relationship between the two nations. Saudi Arabia, meanwhile, also has cut exports of high-sulfur crude, which is less profitable than lighter varieties, as part of broader cuts by the Organization of Petroleum Exporting Countries.

Reduced competition and higher prices for Canadian crude come at a good time for Alberta's oil-sands industry, which is expected to double production within the next 10 years to 3.1 million barrels a day and requires new markets to soak up the growing output. While Canada supplies a quarter of U.S. oil imports, only 2.2% of the crude refined in the Gulf Coast region--which has the lion's share of U.S. heavy-crude refining capacity--came from north of the border last year.

"We think there's an opportunity for Canadian companies to gain more market share in the Gulf market," said Alberta Energy Department Assistant Deputy Minister Mike Ekelund, who is in charge of the province's resource strategy. "We're a supplier that's right next door, we're relatively politically stable, and we think there's a great deal of benefit for Americans in terms of having a secure access to supply."

Canadian producers are adjusting their plans to take better advantage of the shift in the U.S. market. Syncrude, the largest Canadian oil-sands project, changed its growth plans last month, saying future expansions won't include upgraders to covert heavy oil into lighter products, but instead will sell the raw product into the U.S. market. Syncrude is a joint venture operated by Canadian Oil Sands Trust (COSWF, COS.UN.T), Imperial Oil Ltd. (IMO, IMO.T), Suncor Energy Inc. (SU, SU.T), ConocoPhillips (COP), Nexen Inc. (NXY, NXY.T), Murphy Oil Corp. (MUR) and Mocal Energy, a unit of Japan's Nippon Oil Corp. (5001.TO).

Changes in the oil industry abroad are behind the U.S. market shift.

Mexico's heavy crude oil is in decline due to waning production from its giant Cantarell offshore field in the Gulf of Mexico, and exports to the U.S. declined to 1.24 million barrels per day last year, down 28% from their peak in 2006.

In Venezuela, production has been in decline due to political instability and lack of new investment. President Hugo Chavez also has begun to send a fraction of his country's crude exports away from the U.S. to the Chinese market, and has cut exports in recent months to meet OPEC mandates. U.S. imports from Venezuela have dropped to under 900,000 barrels a day in recent months, cut in half from peak rates during the 1990s and down a quarter from 2008.

Meanwhile, other OPEC exporters, mandated to cut production to keep prices high amid lower world demand, have cut production of less-profitable heavy crude first. Saudi Arabia reduced imports to the U.S. to under 1 million barrels a day, down a third from 2008, with most of the reduction in heavy crude.

As the Gulf Coast's regular supplies of heavy crude oil have declined, the price for it has shot up, as Gulf refiners--heavily invested in the heavy-oil cokers used to break the stuff into lighter grades--are willing to pay more to keep their facilities running.

Canadian Natural Resources Inc. (CNQ), a large Canadian oil and gas company with significant production of heavy crude from the oil sands region, said the Canadian heavy-oil discount to West Texas Intermediate crude dropped to an average of 16% during the fourth quarter.

"Historically the heavy-oil differentials have been in that 30% to 45% range, averaging about 32%," Canadian Natural President Steve Laut said during the company's fourth-quarter conference call earlier this month. "We think that has structurally changed and right now, as you know, Canadian heavy-crude differentials are probably in that 10% range, very low."

Laut said high heavy-crude prices were likely to drop a bit, but Canadian heavy crude would likely trade at a discount of 22% to 24% for the foreseeable future.

As a result, Wall Street analysts have begun rewarding Canadian companies that are slanted toward heavy-crude production. Analysts at Goldman Sachs, Morgan Stanley, Credit Suisse, Raymond James, Scotia Capital, BMO Capital Markets, and Canaccord Adams have all upgraded Canadian Natural to buy-equivalent ratings this year.

-By Edward Welsch, Dow Jones Newswires; 613-237-0669; edward.welsch@dowjones.com

Crude futures end lower on demand concerns / Concerns about energy demand tipped the scales for bears

By Polya Lesova & Claudia Assis, MarketWatch
SAN FRANCISCO (MarketWatch) -- Crude-oil futures ended 0.7% lower Friday, as concerns about energy demand superseded earlier gains from an advance in the euro against the dollar.

Crude for May delivery, the most active contract, lost 53 cents to $80 a barrel in the New York Mercantile Exchange. Oil headed below $80 in electronic trading after the market close.

Concerns about demand won the day in a difficult week for oil, which saw a larger-than-expected build in crude-oil inventories. For the week, oil lost 1.2%.

"A bearish specter haunts the market after this week's build on inventories," said Jason Schenker, president of Prestige Economics in Austin. "So the market was looking for any cues to move lower."

Investors wavered between focusing on the good news on the currency side, with the dollar losing ground versus the euro, and their demand expectations, said Phil Flynn, vice president at futures trading and research firm PFGBest Research in Chicago.

A Commerce Department report early Friday showed a slightly lower revision in its estimate for fourth-quarter gross domestic product, and the "not so bullish" U.S. data raised some concern about oil demand, Flynn added.

Inflation-adjusted GDP increased at a 5.6% annualized pace in the final three months of 2009, revised down from the 5.9% pace reported a month ago, even though it was still the fastest growth pace seen in six years. The revision was largely in line with expectations of economists surveyed by MarketWatch.

Meanwhile, data from the University of Michigan showed consumer sentiment for March unchanged at a reading of 73.6, slightly better than estimates of around 73.

The euro gained against the dollar as euro-zone members and the International Monetary Fund agreed to jointly provide aid to debt-ridden Greece if needed. But details of the plan, including the size of any financial aid, remain unclear.

Investors remain concerned about Europe, however, and any bad news from a handful of countries on the periphery of the euro zone would have a negative impact on markets, Flynn added.

In addition to European news, traders will be watching intently the next round of inventory data next week, as well as Friday's employment report, even though most financial markets will be closed that day in observance of Good Friday, Schenker said.

The dollar index /quotes/comstock/11j!i:dxy0 (DXY 81.68, -0.44, -0.54%) , which measures the greenback against a basket of six major currencies, fell 0.5% to 81.70. A weaker U.S. currency generally bodes well for oil and other dollar-denominated commodities.

Natural gas for May delivery ended 10 cents lower, or 2.5%, at $3.93 per British thermal units, while gasoline for May delivery decreased a penny, or 0.5%, to $2.2085.

Polya Lesova is reporter for MarketWatch, based in Frankfurt.

Claudia Assis is a San Francisco-based reporter for MarketWatch.

Tamoil Joins Embattled European Refiners; Wow!!!

Continued weak demand for oil products in Europe forced another refiner to halt operations this week. Libyan company Tamoil has shut its 96,000 barrels a day Cremona refinery in Italy for a month, blaming weak demand and the need to draw inventories.

New shipping companies lack ships

(Reuters) - A handful of shipping companies surging into the U.S. and Brazilian stock markets are so eager for a stake in the global movement of goods they are arriving without the vessels they need to do business.

The companies are betting on the rising price of oil and Chinese demand for commodities like iron ore and coal, but investors are proving skeptical.

So far the companies' businesses are name-only and their shares are taking on water. Of the three shipping companies that have gone public over the last two weeks, only one owns a ship. It leased that single ship to another company owned by the same controlling shareholder.

A fourth shipping company, which does not currently have any ships, is scheduled to raise money in an initial public offering in the United States this week. A fifth company, scheduled for an IPO next week, owns three ships.

"When you have what is mostly a business plan and you're raising money, there is a lot more risk in that than there would be in an existing business," said New York-based Deltec Asset Management's head of equities Greg Lesko, who helps manage $750 million.

"It's not surprising to me some of these deals haven't done well. It really is very early to be considering raising money for a business that doesn't really have its operations up and running in the public equity markets," he said.

Shares of drybulk shipper Baltic Trading Ltd (BALT.N) began trading at their IPO price in their market debut but are now more than 4 percent lower. Shares of crude and fuel oil shipper Crude Carriers Corp (CRU.N) also opened at their IPO price but have slipped more than 10 percent.

OSX Brasil SA (OSXB3.SA), a shipbuilding and oil services start-up backed by Brazilian billionaire Eike Batista, slashed the number of shares and price range of its IPO and traded down 12.5 percent in its Monday debut.

"It's just a business plan," said Josef Schuster, founder of Chicago-based research house IPOX Schuster LLC. "In the short term you must expect a tremendous amount of volatility."

Schuster was formerly part of the Financial Markets Group at the London School of Economics and a member of the Chicago Mercantile Exchange.

NO SHIPS, TOO MANY SHIPS

When the new shipping companies finally do get their vessels they may find themselves in a crowded market.

Analysts warn that the shipping industry faces a surplus of ships. Ships ordered before the financial crisis are still being built and delivered.

The worldwide drybulk fleet, for example, could easily grow 14 percent, even if half of the orders are canceled, said Cantor Fitzgerald analyst Natasha Boyden.

"That's a pretty large number," she said.

Tankers used as floating storage are also being put back into the transport business as the spread between front month crude oil futures prices and further out futures has narrowed, making such storage unprofitable.

"Ships are ships. Industry cycles are going to be the main determinant of the return," said University of Florida finance professor Jay Ritter "Apparently a number of these companies are taking the view that there are opportunities for being contrarian and getting into the shipping business when prices are low."

The uncertainty is making it tough to value the new companies, analysts said.

If Alma Maritime Ltd (AAM.N) and Scorpio Tankers (STNG.N) price at the midpoint of their expected ranges this week and next, they will have a 9 percent and 17 percent premium to their respective tangible book values, IPOdesktop.com President Francis Gaskins said.

Based on Monday's closing prices, Baltic Trading had a 4 percent premium to its tangible book value, while Crude Carriers had slipped to only 90 percent of its tangible book value, he said.

Baltic Trading shortly after its IPO announced plans to sign charter contracts with Cargill Intl, a deal analysts said could be giving investors more assurance about revenue for a company that plans to operate in the volatile spot market.

(Reporting by Clare Baldwin, additional reporting by Robert Gibbons; Editing by Steve Orlofsky)

Evangelos Marinakis, the CEO of Crude Carriers, Discusses the Strengths of the Company

Crude Carriers Corp. (NYSE: CRU), a tanker company focusing on the maritime transportation of crude oil cargoes, announced that the Company's Chairman & Chief Executive Officer, Mr. Evangelos Marinakis, is featured today in an interview with Mr. Barry Parker of BDP1.

Please find below the full text of the interview.

EVANGELOS MARINAKIS, THE CEO OF CRUDE CARRIERS, DISCUSSES THE STRENGTHS OF THE COMPANY

Barry Parker:
We have with us Evangelos Marinakis, the CEO of newly listed Crude Carriers Corp. (NYSE: CRU). The company successfully completed its IPO on March 12, 2010 raising gross proceeds of $256.5 million. Crude Carriers Investments Corp, a company controlled by Mr. Marinakis, invested an additional $40 million in cash, on the same terms as public shareholders. Crude Carriers will use the proceeds to acquire an initial fleet of three large tankers and will focus on the transportation of crude oil cargoes along global routes.

Global shipping is a highly complicated business and it is a vital link in the global economy and trade. Since 2005, shipping has gained wider acceptance among U.S. investors. Still, there is a lot to learn about the intricacies of this global business, as evidenced by some of the rumors and misunderstandings that have surrounded recent shipping IPOs.

Today, we have the opportunity to interview Mr. Marinakis and we will ask him to clarify the company's profile and strategy.

Barry Parker:
It is good to see you again Evangelos. Let's start with the big picture question. What is the business and investment concept behind the launching of Crude Carriers Corp?

Evangelos Marinakis:
Crude Carriers is a new investment vehicle that enables investors to get exposure to the spot crude oil charter market by acquiring vessels at what we believe to be the low point of the cycle. Right now, we believe vessel prices are at very attractive levels, they are well below their five year average and they just seem to have begun to turn up. For example, current VLCC and Suezmax values are more than 40% off their peaks in 2008 and 30% off their averages since 2005. The two newbuilding VLCCs purchased from the yard a few weeks before the Crude Carriers IPO, which were transferred to Crude Carriers at cost, for example, were purchased at a cost of $96.5 million versus a price of $190 million at the peak of the market. Today, these vessels are estimated to be worth $100 million each according to Clarksons' reports. Looking forward, we believe that industry fundamentals will improve significantly, with direct impact on freight rates and asset values.

Returns in shipping come both from the operation of the vessels and the price you pay when you acquire the assets. The entry point in shipping is one of the most significant determinants of returns and we believe now is the right time to invest in the crude oil tanker sector.

In terms of operation, we plan to focus on the spot market, as we believe this will provide higher returns. For example, over the past five years, a spot chartering strategy resulted in a 40% premium in revenue versus a 3-year time charter strategy.

The minimal debt strategy we intend to follow lowers our cash breakeven point and gives us financial flexibility for growth and dividends. We intend to distribute quarterly all net cash flow less operating reserves in the form of dividends.

Crude Carriers will benefit from Capital Maritime's commercial and technical relationships with oil majors and oil traders worldwide providing it with a significant operational competitive advantage.

And, we brought this deal to the market at no premium over the Net Asset Value of the fleet, which we believe was a compelling valuation especially when compared to our peers who trade at significant premiums.

My family has been in the shipping business for 3 generations and I have been in shipping for all my life. We bring to the table a unique track record in vessel management and in investing in the right sector at the right time. A tangible demonstration of my belief in the prospects of Crude Carriers is that I personally invested $40 million at the same valuation as the other investors, fully aligning my own interest with theirs.

Barry Parker:
Let's talk about your fleet. How many ships do you own right now? We all know that in the tanker business, the young age of your vessels is a distinct competitive advantage. What does your fleet look like?

Evangelos Marinakis:
Unlike other shipping sectors, the tanker sector is highly regulated due to the nature of the cargoes we carry and charterers are particularly demanding when it comes to vetting. So, indeed, the age and modernity of our fleet, as well as the reputation and track record of our manager, Capital Maritime, are distinct competitive advantages.

Our initial fleet will consist of three tankers with a weighted average age of less than one year, compared to the industry average of 9 years and considerably younger than any of our public peers. Our vessels are state of the art, high specification vessels built at the best shipyards in the world and perfectly suitable for our business.

Our initial Suezmax vessel is a 2006-built 163,000 dwt crude tanker built at the Daewoo Shipyard in Korea. According to industry data, there are only four Suezmax vessels built to-date with similar high specification features. These features include the capacity to navigate through severe ice conditions (Ice Class 1A), the capacity to transport most oil products as the vessel is fully Epoxy Coated with stainless Steel Coils, and increased maneuverability due to her Bow Thruster and Controllable Pitch Propeller. We expect to take delivery of this vessel within the next 10 days.

We also have agreements to acquire two brand new sister VLCCs of 298,500 dwt each currently completing construction at Universal Shipyard in Japan. We expect to take delivery of the first vessel within this week and the second vessel towards the end of June 2010.

So we will very soon have two vessels in the water earning income for the company and by the second half of June we expect to have the full fleet in place, benefiting from their earning capacity. We expect to pay our first dividend after the end of the second quarter of 2010.

Barry Parker:
Who are you buying your vessels from? How did you determine the price to be paid for them?

Evangelos Marinakis:
The two newbuilding VLCCs were contracted shortly before the IPO from an unrelated third party for $96.5 million each and we are transferring them to Crude Carriers at the same cost, plus a one time 1% sale and purchase fee, which is a standard industry commission for sales and purchase transactions. Capital Maritime, an affiliated company controlled by me, is selling the Suezmax to Crude Carriers. The Suezmax will be acquired for $71.25 million which reflects the average of two valuations from independent shipbrokers, thereby producing an objective benchmark.

But let me elaborate here a bit more, to highlight the value and benefits of this transaction to the shareholders of Crude Carriers. Capital Maritime was able to acquire the two newbuild VLCCs on behalf of Crude Carriers at prices which are almost 50% less than peak prices seen recently. And Capital Maritime bought these vessels without the contingency of the IPO taking advantage of an attractive market opportunity. Usually buying assets subject to IPO or equity issue means that you have to pay a premium for holding the option. We did not pay this premium. At present, based on market sources, the current market value of these VLCCs has appreciated. As these two VLCCs will be contributed to Crude Carriers at their acquisition price and not at their current market value, the shareholders of Crude Carriers receive the full benefit of the run-up in price.

Barry Parker:
What is the relationship between Crude Carriers and Capital Maritime and how can this benefit Crude Carriers?

Evangelos Marinakis:
The relationship with Capital Maritime is actually a significant competitive advantage for Crude Carriers. Capital Maritime will serve as the technical and commercial manager for our fleet and will perform other administrative functions. It is common in the shipping industry to entrust these operations to an affiliated party benefiting from its expertise, synergies and economies of scale.

Currently Capital Maritime is one of the few companies worldwide which is approved and vetted for business with a number of oil majors and its award winning commercial and technical performance has been recognized widely in the industry. Currently, Capital Maritime is the largest chartering counterparty to BP for product tankers. So, Capital's expertise, network, resources and relationships will be at the disposal of Crude Carriers enabling it to draw significant benefits for its operation and growth.

The fees paid to Capital are well within industry standards and, importantly, overall costs are on the low end of our peer group. Let me stress here that shipping is a global and highly competitive business, with a lot of players and with a significant amount of information and transparency. Crude Carriers has fully disclosed and will continue to provide a transparent and analytical breakdown of all fees to be paid for these services, instead of providing a single lump sum figure. Industry benchmarks and standards for such costs, fees and commission are readily and easily available, so anyone can compare them. Please bear in mind that companies which outsource their commercial and technical management are also paying fees and commissions but often do not disclose them but it shows up in their overall operating performance.

Capital Maritime will be in a position to offer a competitive cost structure due to our hands on approach, accumulated experience and tested structure but also by virtue of the very low age of the Crude Carriers fleet. One needs only to look up the cost structure of the Capital Product Partners L.P. fleet, which is also under management by Capital Maritime. You will find that their OPEX and administrative costs are among the lowest in the industry.

Barry Parker:
Shipping companies that have a stable dividend policy tend to seek longer term charter coverage for their fleet which translates into predictable cash flows and thus predictable dividends. With Crude Carriers you follow a completely different approach, focusing on the spot market, and yet you expect to have a generous dividend payout. How can this be possible?

Evangelos Marinakis:
We have a clear dividend policy. We intend to distribute to investors all net cash flow less operating reserves. We expect to pay our first dividend after the end of the second quarter of 2010.

As I mentioned before, the spot market, especially for the large tankers, has historically produced higher returns. For example, over the past five years, a spot chartering strategy resulted in a 40% premium in revenue versus a 3-year time charter strategy.

Our zero to minimal debt strategy means no covenant issues, no amortization of debt and minimal financial expenses. It lowers our cash breakeven point and sets a low hurdle for generating cash profits, even if freight rates are lower. This underpins our dividend policy, as our intention is to distribute to investors all net cash flow less operating reserves. We expect that at current spot rates we should be able to pay out substantial quarterly dividends thereby rewarding our shareholders.

At the same time, we have access to a $100 million competitively priced revolving credit facility with Nordea bank which we can use opportunistically for acquisitions. This credit facility gives the Company additional flexibility to acquire assets through accretive acquisitions, when an attractive opportunity arises.

Barry Parker:
Why do you have Class A and Class B Shares? Are your shareholders getting a fair treatment?

This shareholding structure is common in the shipping industry. Class B shares have higher voting rights enabling the quick decision making required in the highly competitive global shipping markets. However, all shares regardless of Class represent the same economic interest in the Company and get the same economic benefits. I would like to remind you that I personally invested $40 million at the same valuation as the other investors, fully aligning my own interest with theirs. More importantly, our shareholders should know that if I sell a single share below the number of shares I was allocated for my $40 million contribution at the IPO, all my Class B Shares will automatically convert to common shares and I will not have higher voting rights. Under my leadership I expect Crude Carriers to become one of the leaders in the crude tanker industry and I am fully committed to its development and growth for the benefit of all shareholders.

Barry Parker:
You are incorporated in the Marshall Islands. Is this normal industry practice?

Evangelos Marinakis:
Having the Marshall Islands as our legal domicile optimizes the operational and tax structure of our company for the benefit of our U.S. shareholders. The Marshall Islands are a Protectorate of the United States and there are special treaties between them. If you look at the shipping companies listed on U.S. Stock Exchanges you will see that many of them are domiciled in the Marshall Islands.

Barry Parker:
Greece has been in the spotlight with its financial and economic crisis. How does this affect your business?

Evangelos Marinakis:
I am optimistic that with the measures the Greek Government is taking, Greece will ultimately pull through possibly with the support of the European Union or the IMF. But let me stress that our business is not dependent on developments in the Greek economy. We derive our revenues transporting crude oil cargoes along global trade routes, so we depend on developments in the global energy markets.

PDF VERSION OF THE INTERVIEW
Please click the link below to access a PDF version of the interview.

http://www.irwebpage.com/interview/MarinakisInterview032210.pdf

About Barry Parker
Barry Parker is a financial writer and analyst specializing in the maritime sector. His articles appear in a number of prominent maritime periodicals including Fairplay, Seatrade, Lloyds Shipping Economist and Janes Transport Finance.

About Crude Carriers Corp.
Crude Carriers Corp. is a newly formed Marshall Islands corporation focusing on the maritime transportation of crude oil cargoes. The company's common shares trade on The New York Stock Exchange under the symbol "CRU".

Contact:
For further information please contact:
Company contacts:
Ioannis Lazaridis, President
+30 (210) 4584 950
i.lazaridis@crudecarrierscorp.com
Jerry Kalogiratos, CFO
+30 (210) 4584 950
j.kalogiratos@crudecarrierscorp.com
Investor Relations / Media:
Nicolas Bornozis, President
Capital Link, Inc.
230 Park Avenue - Suite 1536
New York, NY 10160, USA
Tel: (212) 661-7566
Fax: (212) 661-7526
E-mail: crudecarriers@capitallink.com
http://www.capitallink.com/

Govt. says US oil production increased in 2009

By MEAD GRUVER (AP)

CHEYENNE, Wyo. — Increased crude oil production in the Gulf of Mexico and North Dakota more than offset declines elsewhere last year to result in the first annual increase in U.S. oil production since 1991, according to the U.S. Energy Information Administration.

Domestic oil production in 2009 averaged 5.32 million barrels a day, up 7.4 percent from 4.95 million barrels a day in 2008, according to the federal agency's Short-Term Energy Outlook report for March.

Last year saw the highest level of domestic oil production since 2004, when the daily average was 5.42 million barrels. Production had been declining steadily since 1991's daily average of 7.42 million barrels.

The report forecasts production to continue growing for at least the next couple years, with increases of 3.9 percent predicted in 2010 and 0.3 percent in 2011.

Last year's increase resulted mainly from drilling investments made by energy companies before prices collapsed in 2008, said Tancred Lidderdale, an analyst in the Energy Information Administration, part of the U.S. Department of Energy.

The federal deepwater reserves in the Gulf of Mexico have been known about for years but only last year were sufficiently tapped to significantly boost production.

"It takes anywhere from five to 10 years to develop new deepwater, offshore fields," Lidderdale said Wednesday.

Through October, the most recent month for most specific data, federal deepwater production in the gulf was up 30 percent, an increase of 107 million barrels, compared with the first 10 months of 2008.

In North Dakota, production was up just under 30 percent, or 15 million barrels, over the first 10 months of 2009. Most came from the Bakken shale in the western part of the state.

New drilling technologies such as improved methods of hydraulic fracturing — pumping a pressurized mixture of water and chemicals underground to split rock — have enabled production in the previously unproductive formation.

Higher oil prices starting around 2004 spurred the kind of investment that made developing areas like the Bakken feasible, said Rayola Dougher, senior economic adviser for the American Petroleum Institute.

"As the price of oil went up, you were able to access resources that were more difficult and expensive to get to," Dougher said.

Other major oil-producing states with increased production through October included Louisiana, up 0.85 percent; Oklahoma, up 3.25 percent; Mississippi, up 4.27 percent; and Utah, up 5.9 percent.

Production declined in several other states. Among them were Alaska, where production was down 4.5 percent on the North Slope and 5.3 percent elsewhere; Texas, down 3.75 percent; California, down 3.14 percent; Wyoming, down 4.3 percent; Montana, down 12.45 percent; Colorado, down 3.36 percent; and New Mexico, down 0.05 percent.

OIL FUTURES: Crude Helped By Financial Markets, Hurt By Supply

By Wayne Ma
Of DOW JONES NEWSWIRES
SINGAPORE (Dow Jones)--Crude oil futures remained above $80 a barrel in Asia Tuesday on expectations that improving financial markets will boost demand for oil, but gains are likely limited due to an overhang of crude supply, some analysts said.

"The market tends to huff around the $80 level," said Victor Shum, an analyst at Purvin & Gertz in Singapore. "There is no question that on a global basis, oil demand has picked up compared with a year ago," he said. "But the supply of oil has also been increasing at the same time."

On the New York Mercantile Exchange, light, sweet crude futures for delivery in May traded at $81.52 a barrel at 0350 GMT, down 8 cents in the Globex electronic session. May Brent crude on London's ICE Futures exchange fell 8 cents to $80.46 a barrel.

Data due Wednesday from the U.S. Department of Energy is expected to show a rise in crude inventories. Stockpiles are expected to rise by 1.2 million barrels, according to the average estimate of eight analysts polled by Dow Jones Newswires.

There have been strong attempts by investors to push the price of crude oil above $84 a barrel, Shum said. However, most of that has been driven not by improving fundamentals but by speculators chasing after returns, he said.

"The push to higher prices primarily comes from a lot of cheap money," he added.

Oil prices will likely take cues from the direction of financial markets in the coming days, said Jim Ritterbusch, president of Ritterbusch & Associates, in a note to subscribers.

U.S. stocks rose overnight to 17-month highs after lawmakers voted late Sunday to approve a health-care overhaul bill.

"Downside price follow-through below the $80 (a barrel) mark will prove difficult without major assistance from the financial markets," he said. "A sustained price correction will be extremely difficult with the stock market posting new highs."

Nymex reformulated gasoline blendstock for April--the benchmark gasoline contract--fell 37 points to 225.25 cents a gallon, while April heating oil traded at 208.45 cents, 8 points higher.

ICE gasoil for April changed hands at $666.75 a metric ton, up $4.50 from Monday's settlement.

-By Wayne Ma, Dow Jones Newswires; +65 6415 4065; wayne.ma@dowjones.com