MW: Crude futures trade above $77 a barrel, extending gains
American Petroleum Institute is due to report inventory data this afternoon
By Polya Lesova, MarketWatch
FRANKFURT (MarketWatch) -- Oil futures traded above $77 a barrel on Wednesday, buoyed by rising equity markets, though gains were limited by expectations of increases in U.S. crude and gasoline inventories.
Crude oil for March delivery gained 63 cents, or 0.8%, to $77.64 a barrel in electronic trading on Globex. It earlier hit an intraday high of $77.82 a barrel.
Oil prices rallied nearly 4% Tuesday on the New York Mercantile Exchange, boosted by a slide in the U.S. dollar against the euro and strong gains for U.S. equities.
"The current advance could conceivably take us to the $80 level based on technical [factors] alone, but we suspect that gains beyond that point will be hard to sustain given the otherwise uninspiring fundamental backdrop," said Edward Meir, senior commodity analyst at MF Global, in a note to clients.
Crude prices have gained recently for reasons unrelated to fundamental factors such as supply and demand. Demand for oil remains weak, while inventory levels are relatively high.
Analysts at Commerzbank AG said that a sustained break above $80 a barrel "seems unlikely since fundamental data remains weak."
Upcoming supply data "should confirm the weak fundamental picture," they said.
The American Petroleum Institute will report inventory data on Wednesday afternoon, while the Energy Information Administration will release its more closely watched data on Thursday morning. The reports are delayed this week because of Presidents Day.
Analysts polled by Platts expect a 1.65-million-barrel build in crude supplies for the week ended Feb. 12. They also project an increase of 1.5 million barrels in gasoline stocks and a decline of 1.6 million barrels in distillate supplies.
U.S. stock futures pointed to a higher opening on Wall Street, as European stock market posted strong gains.
Investors are awaiting several economic reports on Wednesday, including housing starts and industrial production for January. The minutes of the Federal Open Market Committee will also be released.
