Energy Information Administration is due to report inventory data this morning
By Polya Lesova, MarketWatch
NEW YORK (MarketWatch) -- Crude-oil futures turned lower on Wednesday with energy traders adopting a cautious tone ahead of the release of weekly U.S. petroleum supplies data.
"The oil price is being supported by robust import data from China and an upward revision to the U.S. Department of Energy's oil-demand projections," said analysts at Commerzbank in a note to clients.
Crude for April delivery was last down 6 cents at $81.43 a barrel in electronic trading, losing earlier gains that saw the contract trade as high as $81.95 a barrel.
Crude had moved up in the aftermath of a revision from the Organization of the Petroleum Exporting Countries in which it raised its forecast for global oil demand. Strong trade data reported by China also helped fuel the higher prices.
But gains fizzled out early in the session as attention turned closer to home. Late Tuesday, the American Petroleum Institute reported an increase in its estimate of crude supplies for the week ended March 5 that was much bigger than had been forecast.
Crude supplies rose by 6.5 million barrels, while gasoline inventories dropped by 3.18 million barrels, the API said.
The Energy Information Administration will report issue its own supply data at 10:30 a.m. Eastern.
Analysts polled by Platts expect an increase of 2.1 million barrels in crude inventories but a decline of 338,000 barrels in gasoline supplies. They also project a decrease of 950,000 barrels in distillate supplies.
Still, crude prices are likely to hold above $80 a barrel in the near term if Wednesday's inventory data show continued improvements in U.S. energy demand, said analysts at Credit Suisse in a note to clients.
Higher demand
Both OPEC and the EIA raised their forecasts for oil demand.
OPEC said Wednesday it now expects world oil demand to grow by 900,000 barrels a day in 2010. This represents an upward revision of 100,000 barrels a day from the previous assessment.
Demand has been highly dependent on the world economy, supported by government-led stimulus plans, OPEC said in its monthly oil market report.
"These stimulus plans have already done a great job of jump-starting many sectors of the economy, including energy," the cartel said. "However, questions remain as to how long governments will be able to afford supporting their economies. Should this support diminish, then world oil demand would of course be impacted."
The EIA also raised its forecast for daily oil demand. It now expects oil consumption to grow by 1.5 million barrels this year, up from 1.2 million barrels in its previous outlook.
China turns to domestic demand
One of the largest consumers of oil in the world, China earlier said its trade surplus narrowed to $7.6 billion in February because of soaring imports, official data showed. Read more on the Chinese data.
Compared with the year-earlier month, both Chinese exports and imports grew at a higher-than-expected rate, with the value of imports climbing 44.7%.
China imported 4.83 million barrels of crude a day during February, the second-highest rate on record on a daily basis, Reuters reported on Wednesday, citing official data.
