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Crude oil prices fall ahead of Wednesday's U.S. energy inventory report

Crude oil prices fall ahead of Wednesday's U.S. energy inventory report

Oil prices dropped below $65 a barrel in erratic trading Tuesday as investors made final bets while they awaited the government's report on oil and gasoline inventories.
There was little news to influence the market, leaving traders to hypothesize whether Wednesday's report would exacerbate concerns about dwindling gasoline supplies. Last week's Energy Department report showed an unexpected drop in U.S. gasoline stockpiles and refinery use.
Prices swung sharply Tuesday as speculators tried to time market peaks and valleys, said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.
"Day traders are in paradise today," he said.
Light, sweet crude for June delivery fell $1.31 Tuesday to settle at $64.40 a barrel on the New York Mercantile Exchange.
"It's all over the place," Flynn said.
Brent crude for June on London's ICE Futures exchange fell 65 cents to $67.00 a barrel.
Gasoline for June delivery fell 1.47 cents to $2.2447 a gallon on the Nymex.
The gasoline contract remains sharply higher than earlier in the year, when it hit a low of around $1.60 a gallon in late January. The average price of a gallon of gas at the pump has followed, rising to $2.965 Tuesday, according to AAA, up more than a penny from Monday and more than 29 cents from a month ago.
A series of refinery accidents and outages have contributed to the decline in gas supplies, analysts say.
"Until we start to see refineries come back from the maintenance season ... the market's going to continue to be led by gasoline," said Eric Wittenauer, an energy futures analyst at A.G. Edwards & Sons in St. Louis. "There's a fear built into the market that there won't be enough gasoline for the summer driving season."
On Friday, a fire and explosion that temporarily shuttered Gary Williams Energy Corp.'s 50,000 barrel-per-day refinery in Wynnewood, Oklahoma, left gasoline supply terminals in two Iowa cities temporarily without gasoline.
Officials in Iowa said some terminals have experienced spotty shortages of gasoline in recent days, and that temporary outages could continue for weeks.
Because these situations should be temporary, gasoline inventories will reverse course and climb, sometime soon, said Mike Lynch, an oil market analyst at Strategic Energy and Economic Research Inc., in Amherst, Massachusetts.
"I think the price (of gasoline) is close to peaking out," Lynch said. But until inventories show signs of increasing, he said "nobody wants to take a bearish position on gasoline."
Refinery problems cause a bottleneck in the refinery supply chain. Oil inventories build behind the refineries, causing the price of crude to fall, while gasoline supplies fall, typically sending prices higher.
The market appeared unaffected by news Tuesday that gunmen in Nigeria kidnapped six foreign oil workers and killed a Nigerian sailor on a Chevron Corp. ship.
"This incident has once again highlighted the instability in the region, with the country's output still below full capacity, and the most recent presidential elections have only made the situation worse," said Michael Davies, an analyst at Sucden in London.
A Nigerian spokesman for San Francisco-based Chevron said the company had shut down an oil station that supplies the ship because of the attack, decreasing production by 15,000 barrels a day.
In other Nymex trading, heating oil futures fell 1.19 cents to $1.8829 a gallon on the Nymex, while natural gas futures fell 1.45 cents to $7.718 per 1,000 cubic feet.


Updated : 2021-03-01 03:17 GMT+08:00