LONDON—Gains in equities markets lifted crude-oil futures Tuesday, but a strong dollar is likely to keep a lid on oil prices.
The front-month April light, sweet, crude contract on the New York Mercantile Exchange was trading $0.35 higher at $79.05 a barrel. The front-month April Brent contract on London's ICE futures exchange was up $0.46 at $77.35 a barrel.
"The current range is likely to hold steady at least until midweek, unless the dollar tumbles from here," said Andrey Kryuchenkov, vice president of commodities research at VTB Capital.
Oil futures' "downside remains limited," he said, citing geopolitical tensions surrounding Iran and expectations of no quota change in the upcoming meeting by the Organization of Petroleum Exporting Countries on March 17. "At the same time, gains beyond $80 in London are hard to justify fundamentally at the moment, as seasonality has yet to kick in and product stockpiles remain relatively high," Mr. Kryuchenkov said.
In Chile, the country's biggest refinery, Refineria Bio Bio, with a capacity of 116,000 barrels a day, is likely to be offline for at least a month due to structural damage from the earthquake. The smaller 104,000-barrel-a-day refinery, Refineria Aconcagua, is expected to restart operations this week once electrical power is restored, state-run Empresa Nacional del Petroleo, or Enap, said.
Increased demand from Chile is likely to help reduce the surplus of middle distillates stocks in the U.S. Gulf of Mexico, analysts said.
"The ICE Gasoil timespreads have continued to narrow; they are offering less an incentive for barrels to be put afloat on the water and the additional requirements from Chile will be a welcome outlet to replace waning demand for floating storage," said Olivier Jakob, managing director of Swiss consultancy Petromatrix.
The widely watched U.S. oil inventory data by the Department of Energy are due 1530 GMT Wednesday. Crude-oil inventories are expected to rise by 700,000 barrels in the week ended Feb. 26, while gasoline stocks are likely up 600,000 barrels, and distillates stocks may fall by 300,000 barrels, according to the mean of forecasts by eight analysts surveyed by Dow Jones Newswires.
Elsewhere, the ICE's gasoil contract for March delivery was down $2.00 at $631.75 a metric ton, while Nymex gasoline for April delivery was up 1.94 cents at $2.1750 a gallon.
