MW: Oil higher on expectation data will show drop in inventories
By Moming Zhou, MarketWatch
NEW YORK (MarketWatch) -- Crude futures edged higher Tuesday on expectations that weekly petroleum data will show U.S. crude inventories fell last week, raising hopes that fuel demand is recovering.
Crude for February delivery was last up 0.7% at $79.31 a barrel. It ended Monday's trading at the highest level in more than five weeks.
Industry group American Petroleum Institute will report its weekly petroleum data later Tuesday, while the Energy Information Administration will release its data Wednesday.
Analysts polled by Platts expect the data to show a drop of 2.2 million barrels in U.S. crude inventories. Gasoline stocks are projected to build 900,000 barrels, and distillate fuels, which include diesel and heating oil, are expected to fall 2.1 million barrels.
"The markets seem to want to push higher, with crude in particular looking to test key $80 resistance," said Edward Meir, an analyst at MF Global. "Also simmering in the background, is the deteriorating situation in Iran."
Geopolitical tensions rose in the Middle East as Iran accused the U.S. and the U.K of interfering in its affairs, in the wake of rebukes issued earlier in the week from Washington and London over Tehran's crackdown on protesters, Dow Jones Newswires reported.
Iran is the world's fourth biggest oil producer and ranks No. 2 in the Organization of Petroleum Exporting Countries.
"Increased tensions across Iran were cause for concern as the market began to worry about the security of Middle Eastern oil supplies," said Brian Niemiec, an analyst at Susquehanna Financial Group.
In other energy trading, January heating oil rose 1.3% to $2.1005 a gallon on expectations that cold weather in the U.S. will raise demand for the fuel.
January gasoline added 0.5% to $2.0305 a gallon, while January natural gas slid 0.6% to $5.95 per million British thermal units.
In economic news, the market value of U.S. homes in 20 major cities was flat in October and failed to keep pace with gains so far in 2009, according to the Case-Shiller home-price index released Tuesday by Standard & Poor's.
