American Petroleum Institute is due to release inventory data later on Tuesday By Polya Lesova, MarketWatch FRANKFURT (MarketWatch) -- Oil futures fell on Tuesday for a second session to trade below $82 a barrel, as forecasts of warmer weather raised expectations of lower demand for heating fuel. Crude oil for February delivery dropped 75 cents, or 0.9%, to $81.77 a barrel in electronic trading on Globex. It earlier hit an intraday low of $81.59 a barrel. Oil prices finished slightly lower on Monday, pulling back from 15-month highs. "Crude prices retreated slightly yesterday, as the U.S. is expected to get a break from cold temperatures this week which should bring down recently strong heating oil demand," said analysts at Vienna-based JBC Energy in a note to clients. Following weeks of freezing temperatures, a January thaw is on the way for the U.S. and international regions that have some of the heaviest energy demand, according to AccuWeather.com. In addition to weather forecasts, energy traders will also be watching an upcoming government report on the outlook for energy demand as well as data on petroleum inventories. The U.S. Energy Information Administration (EIA) will release on Tuesday its short-term energy outlook, which will include its latest projections about demand. In its December outlook, the EIA forecast that world oil consumption will grow in 2010 by 1.1 million barrels per day to 85.2 million barrels a day. Build in crude supplies seen The American Petroleum Institute is due to report on U.S. petroleum inventories at 4:30 p.m. Eastern time on Tuesday. Analysts polled by Platts expect a 1.9-million-barrel increase in U.S. commercial crude stocks for the week ended Jan. 8. "Historically, one can expect crude stocks to build in January, as imports rebound from their depressed levels in December when refiners leave tankers out to sea due to end-of- year tax considerations," said Linda Rafield, a senior oil analyst at Platts, in a statement. The analysts also project a drawdown of 1.7 million barrels in distillate supplies, as cold temperatures along the Atlantic Coast likely led to increased demand for heating oil. They expect a build of 1.6 million barrels in gasoline stocks and an unchanged refinery run rate of 79.86%. The EIA will release its more closely watched inventory data at 10:30 a.m. Eastern time on Wednesday. Also on Globex, February heating-oil futures fell 2 cents to $2.16 a gallon and February natural-gas futures dropped 4 cents to $5.42 per million British thermal units.

Source