Singapore: Crude fell towards $76 on Tuesday ahead of US reports expected to show fuel stockpiles rose in the world’s top oil-consuming nation last week.
Prices also tracked Asian equities lower on lingering concerns about euro-zone debt, which also boosted the dollar. A stronger greenback renders imports of dollar-denominated oil more expensive for non-U.S. buyers.
US crude for delivery in November fell 26 cents to $76.26 a barrel at 8:25am, while ICE Brent slid 32 cents to $78.25.
Accelerating demand from emerging markets and ample inventories in the United States have kept oil in a tight trading range between $70.76 and $78.04 for almost seven weeks, with limited price fluctuations mostly due to the influence of equity and currency markets.
Alongside this price stability, a two-tiered market has prevailed with European benchmark Brent trading at a premium to U.S. benchmark West Texas Intermediate (WTI) most of the time.
“The potential in the oil market in either direction is limited,” said Stefan Graber, a commodities analyst with Credit Suisse in Singapore.
It “is perceived to be well supplied and we think a new fundamental impulse is needed for prices to break out of their recent trading range.”
US distillate and gasoline supplies may have gained last week, by 300,000 barrels and 700,000 barrels respectively, with demand seen weak, a preliminary Reuters poll of analysts showed on Monday, ahead of weekly inventory reports Tuesday and Wednesday.
Crude oil stockpiles probably fell by 400,000 barrels on lower imports as seasonal refinery maintenance slowed demand, the poll for the week to Sept. 24 showed.
Industry inventory statistics will be published by the American Petroleum Institute (API) on Tuesday at 2030 GMT, followed by government data from the Energy Information Administration on Wednesday at 8:00pm.
Japan’s Nikkei averaged slipped 0.8% on Tuesday as exporters lost ground in the wake of weaker US stocks.
The euro fell from a five-month high against the US dollar on Monday, while the dollar extended gains against a basket of currencies on Tuesday, on worries about fiscal debt problems in euro-zone countries such as Ireland.
Gold eased on Tuesday after hitting a record high of $1,300 per ounce on Monday on renewed worries about euro-zone debt and expectations and that the Federal Reserve will further ease monetary policy.
The US National Hurricane Center on Monday said a low pressure system in the northwest Caribbean Sea had a 40% chance of strengthening into a tropical cyclone over the next 48 hours as it drifts north-northeast towards Cuba and Florida.
Tuesday’s bearishness in oil markets went beyond fuel supplies. Crude oil freight rates on major routes are hovering near 2010 lows this week as an oversupply of tankers continues to weigh on the market.