WSJ: OIL FUTURES: Crude Lower On Stronger Dollar; US Data Eyed
LONDON (Dow Jones)--Crude futures remain lower Wednesday in Europe due to a stronger dollar and profit-taking, with sentiment still cautious ahead of the widely-watched weekly U.S. oil inventory data.
European stock markets are mostly lower while the dollar is rising, partly due to continued concerns over European sovereign debt. But focus is still on the U.S. oil data, due 1530 GMT.
"Today, all eyes will be upon the weekly inventories released by the Department of Energy in the U.S. in trying to determine whether the overall stockpiles are still falling from multiyear highs seen in September," said Glen Ward, head of retail derivatives of London Capital Group.
At 1125 GMT, the front-month January Brent contract on London's ICE futures exchange was down 36 cents at $91.03 a barrel.
The front-month January light, sweet crude contract on the New York Mercantile Exchange was trading 48 cents lower at $88.21 a barrel.
The ICE's gasoil contract for December delivery was down $5.75 at $760.50 a metric ton, while Nymex gasoline for January delivery was 1.90 cents lower at $2.3040 a gallon.
The American Petroleum Institute, an industry trade group, Tuesday painted a mixed picture about oil stocks. It said U.S. crude stocks fell 7.338 million barrels last week, while gasoline inventories rose 4.795 million barrels and distillate stocks rose 1.744 million barrels.
This isn't in line with market expectations. According to a survey of 17 analysts by Dow Jones Newswires, crude stocks are likely down 1.2 million barrels on average, while gasoline stocks are seen up 100,000 barrels and distillates inventories down 600,000 barrels.
Fundamentally, growing geopolitical risk in the Middle East, after talks with Iran broke down again, and strong heating demand in the northern hemisphere due to cold weather, are still supportive, analysts said. But in the near-term, the market seems to worry more about European sovereign-debt risk and the possibility of an interest rate hike in China.
"With most indicators pointing in a negative direction this morning and continued profit taking likely after WTI broke the upper end of OPEC's desired price range [$70-90 a barrel] yesterday, the crude oil rally seems to have lost its momentum for now," said Filip Petersson, an analyst of Stockholm-based consultancy SEB Commodity Research.
