OIL FUTURES: Crude Lower On Equities; Focus On US Oil Data
11/03/2009 08:17AM
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LONDON (Dow Jones)--Crude futures lost ground Tuesday amid across-the-board losses in European equity markets and concerns over the weak fundamentals of global oil market.
With a lack of market-moving news on fundamentals, the crude oil market continued to take its cue from equity markets, which saw hefty losses in Europe after a bout of negative news, particularly for financial companies.
At 1130 GMT, the front-month December Brent contract on London's ICE futures exchange was down 83 cents at $75.72 a barrel.
The front-month December light, sweet, crude contract on the New York Mercantile Exchange was trading 91 cents lower at $77.22 a barrel.
The ICE's gasoil contract for November delivery was down $8.00 at $619.25 a metric ton, while Nymex gasoline for December delivery was down 203 points at 197.00 cents a gallon.
Traders will closely watch the upcoming U.S. oil inventories data. The American Petroleum Institute will release its data later Tuesday, while the widely watched data by the Department of Energy are due out at 1530 GMT Wednesday.
Crude oil inventories are expected to rise by 1.8 million barrels in the week ended Oct. 30, according to the mean of forecasts of six analysts surveyed by Dow Jones Newswires.
Gasoline stocks are expected to rise by 500,000 barrels, while distillate stocks, including diesel and heating oil, are expected to remain unchanged, according to the survey.
Despite encouraging economic data from many countries, it remains to be seen when global economic growth could finally pull the oil market out of surplus, analysts said.
"The problem remains that the distillates being produced around the world is going into the tanks of floating vessels rather than the tanks of 18 wheelers," said Olivier Jakob, managing director of Swiss Consultancy Petromatrix.
"Coming out of the vicious circle of refining products and hiding those in floating storage would require strong world economic growth to pull the shipping rates higher but this is not yet occurring."
Looking ahead, traders will keep a sharp eye out for the Federal Reserve policy statement Wednesday and the U.S. nonfarm payroll numbers Friday.
These key economic developments will be "the prime market movers this week, and so we do not expect the markets to do much until later in the period," said Edward Meir, analyst of MF Global.
Meanwhile, "the dollar is in the throes of a mini-correction that could see it strengthen somewhat further from here, and likely exert continued downward pressure on energy," Meir said.
-By Sherry Su, Dow Jones Newswires; +44(0)20-7842-9329; sherry.su@dowjones.com