By Georgi Kantchev
LONDON--Oil prices moved in a narrow range early on Wednesday,
with traders bracing for U.S. oil inventory data expected later in
the day.
Oil futures have been whipsawing in recent weeks as market
participants weigh signs of impending supply cuts and improving
demand against signs of continuing global oversupply. A key
indication of oversupply in the U.S., official inventory data from
the U.S. Energy Information Administration will be watched closely
later Wednesday, with analysts expecting another large build
up.
Brent crude for April delivery was down $0.27, or 0.5%, at
$60.73 a barrel on London's ICE Futures exchange. On the New York
Mercantile Exchange, light, sweet crude futures for delivery in
April traded at $50.79 a barrel, up $0.27, or 0.5%. Both oil
benchmarks had settled higher on Monday.
Analysts polled by The Wall Street Journal expect inventories to
have increased by 4.6 million barrels last week as domestic crude
production remains at multi-decade highs. Inventories are already
at their highest level for this time of year in at least the last
80 years, the EIA said in its previous report.
Late Tuesday, the American Petroleum Institute said its data
showed U.S. crude inventories rose by 2.9 million barrels for the
week ended Feb. 27.
The rapid crude inventory buildups pose a major downside risk
for the coming weeks and BMI Research expects oil prices to remain
low and volatile in the first half of the year.
"Further upward price movement will have to be driven by
fundamentals and not sentiment," it said.
News that Libyan oil production has increased despite the fresh
fighting added to the fears of continuing global oversupply of
crude. Oil output in the country, where two rival governments are
locked in a violent conflict, has risen in recent days to around
500,000 barrels a day, up from an average of 325,000 barrels a day
in January, the state-run National Oil Co. said.
Meanwhile, Saudi Arabia on Tuesday increased the price
differentials for its oil sold to customers in the U.S. and Asia in
April. Traders said the monthly price adjustments reflect
seasonally stronger refining margins and the recent rally in crude
prices.
"The rebound in oil prices came faster than expected and has run
most of its course," said Norbert Ruecker, head of commodities
research at the Julius Baer banking group. Mr. Ruecker expects
production growth in North America to slow in the coming weeks, but
he sees prices stabilizing above $60 per barrel over the coming
months.
Nymex reformulated gasoline blendstock for April--the benchmark
gasoline contract--fell 0.8% to $1.9349 a gallon, while ICE gasoil
for March changed hands at $585.50 a metric ton, up $0.25 from
Tuesday's settlement.
Write to Georgi Kantchev at georgi.kantchev@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires