MW: Crude falls as dollar rebounds and stocks struggle
Prices fall further after API releases inventories report
NEW YORK (MarketWatch) -- Crude-oil futures briefly traded above $80 a barrel Tuesday, but turned lower by the close of floor trading as U.S. stocks fell and the dollar strengthened, pressuring dollar-denominated oil prices.
Oil futures sank further in late trading, slipping below $79 a barrel, after the American Petroleum Institute said U.S. crude-oil stocks rose more than anticipated.
During the regular session, crude for December delivery ended down 38 cents, or 0.5%, at $79.05 a barrel on the New York Mercantile Exchange. It fell as low as $78.15 but also rose to $80.51.
Crude prices "ride on the dollar over the course of the Tuesday session, as there is not much in terms of U.S. macro news," said Edward Meir, an analyst at MF Global.
Also Tuesday, both the International Energy Agency and the U.S. Energy Information Administration forecast worldwide energy demand would soon rebound as the global economy recovers, with the EIA raising its forecast for oil prices, in part due to rising appetite in China. Read more on global energy demand.
In currencies, the dollar remained higher in most of the session Tuesday. Gains were reduced in afternoon trading after crude's floor trading closed. The dollar index (DXY 74.99, -0.03, -0.04%) hit a high of 75.271 but recently traded at 74.984, down less than 0.1%. See Currencies.
The S&P 500 Index (SPX 1,093, -0.07, -0.01%) ended less than a point lower, while the Dow Jones Industrial Average (INDU 10,248, +20.63, +0.20%) closed up 20 points. The Nasdaq Composite Index (COMP 2,151, -2.98, -0.14%) also ended with a loss. See Market Snapshot.
Late Tuesday, API said oil inventories increased by 1.2 million barrels, according to Dow Jones Newswires. The group also reported a 1.4-million-barrel build in gasoline stocks, said the wire service.
That report precedes the Energy Information Administration's more closely watched U.S. data, due at 11 a.m. Eastern Thursday -- a day later than usual because of the Veterans Day holiday.
Analysts polled by Platts expect a buildup of 1 million barrels in commercial crude stocks for the week ended Nov. 6. They also project an increase of 700,000 barrels for gasoline and a decline of 900,000 barrels for distillates on the week.
Refinery utilization is pegged to have edged up 0.4 of a percentage point, to 81%, in the latest week.
Reflecting the seasonal switchover toward winter fuels, refinery runs "generally start to rise throughout November," noted Linda Rafield, senior oil analyst at Platts.
However, "poor margins may convince refiners to keep production at low levels," she said in a statement.
Meanwhile, investors weighed the potential for fallout from Tropical Storm Ida, which came ashore along the Gulf Coast earlier Tuesday.
"The market is paying its due respect to Ida," said Phil Flynn, vice president at futures trading and research firm PFGBest Research.
