Singapore: Oil prices were steady Wednesday ahead of the release of US data expected to show crude stockpiles rose last week while gasoline inventories dropped.
The US Energy Department’s weekly petroleum supply snapshot, to be released later in the day, was expected to offer the oil market some price direction, analysts said.
“The data will be important to the direction of the oil market particularly with the oil price having softened somewhat,” said David Moore, a commodity strategist with the Commonwealth Bank of Australia in Sydney. “A large build in crude or gasoline might weigh on oil prices.”
Analysts expected this week’s data to show crude oil inventories grew 2.3 million barrels for the week ended 28 March, according to a Dow Jones Newswires survey. Gasoline inventories were forecast to have fallen 2 million barrels, while distillate stocks, which include heating oil and diesel fuel, were expected to fall 1.7 million barrels, the survey showed.
Light, sweet crude for May delivery rose 48 cents to $101.46 a barrel in Asian electronic trading on the New York Mercantile Exchange by midmorning in Singapore.
Investors were also watching the movement of the US dollar, which rose Tuesday, helping to push the oil contract down 60 cents to settle at $100.98 a barrel.
Investors who previously bought commodities such as oil as a haven against inflation and a falling dollar sold as the greenback strengthened against the euro and other currencies. A stronger dollar also makes oil more expensive to overseas investors.
Many analysts say oil investors have taken most of their price cues in recent months from gyrations in the dollar.
But the choppy trading in Tuesday’s floor session reflected a debate among investors over oil’s future direction. Many analysts believe dollar-induced buying has driven oil prices far beyond levels that can be justified by supply and demand or economic conditions.
The second quarter of the year, which began Tuesday, typically sees the lowest petroleum demand. The country’s appetite for oil and gasoline have fallen sharply since January, and oil supplies have mostly risen in recent weeks.
Other investors see continued strong demand for oil and fuel from China and India as a sign that oil prices have further to rise, despite demand and supply dynamics in the US.
Last week, oil prices surged by $4 a barrel partly on a weekly report by the US’s Energy Information Administration that showed gasoline and distillate stocks dropped much more than forecast.
The inventory report stoked worries that stockpiles of gasoline in particular are falling at a time when analysts would like to see them rising in advance of peak summer driving season.
In other Nymex trading, heating oil futures were flat at $2.8797 a gallon while gasoline prices added 0.98 cent to $2.649 a gallon. Natural gas futures fell 9.1 cents to $9.633 per 1,000 cubic feet.
In London, Brent crude futures rose 33 cents to $100.50 a barrel on the ICE Futures exchange.