Crude futures ended lower today as the market failed for the third straight day to sustain a rally above the psychologically important $80-per-barrel level.
US crude settled 96 cents, or 1.2%, lower at $78.70 per barrel after several attempts to crack through an intraday high of $80.62 per barrel, the highest level since 12 January, fizzled.
London Brent crude settled 70 cents lower, at $76.89 per barrel.
"We've been between $70 and $84 for the last couple of months. The longer you stay in a range, you'll see faster moves within the ranging. But really nothing has changed," said Gene McGillian, an analyst with Tradition Energy in Stamford, Connecticut.
"If we come in [Tuesday] and see a further equities rally and maybe a little weakness in the dollar, the market could be right back up at $80," he said, but added that strong signs of higher oil demand will be needed to break the collar around prices.
He noted that April gasoline futures, trading for the first day as the front-month contract, came under heavy selling pressure after trading to the highest intraday front-month price since 6 October 2008. "People saw gasoline above $2.20 and that looked pricey," he said, adding that heavy selling in the contract helped pulled down crude.
Traders said the market will focus on upcoming US oil inventory data for near-term direction.
The American Petroleum Institute's data for the week ended 26 February are due tomorrow afternoon, while the more widely tracked figures from the government's Energy Information Administration are scheduled for release at 10:30 am EST Wednesday.
Analysts surveyed by Dow Jones Newswires expect crude oil stocks to rise by a mean of 700,000 barrels, with forecasts ranging from a rise of 2.25 million barrels to a drop of 1.6 million barrels.
Distillate stocks (diesel and heating oil) are expected to drop by 300,000 barrels, with a range of expectations from a rise of 1.8 million barrels to a drop of 1.75 million barrels.
Gasoline stocks are expected to rise by 600,000 barrels, with projections spanning from a gain of 2 million barrels to a decline of 750,000 barrels.
Ahead of its 17 March meeting on oil production policy, Opec continues to pump more oil and show lower compliance with output restraints.
Production from the 11 members of Opec bound by output restraints crept up by 110,000 barrels per day in February to 26.895 million bpd, a Dow Jones Newswires survey showed.
That puts the group's compliance with targeted cuts that began in late 2008 at just 51%, down from 54% in January and 82% in March 2009.
Oil prices have averaged near $77.50 per barrel, within Opec's comfort zone, since the group agreed in December to keep formal output restraints in place.
Members have not given any signs that they plan to change policy at the upcoming Vienna talks.
