OIL prices declined for the first time in three days, as analysts forecast rising crude supplies in the United States (U.S.), the world's biggest energy consumer.
Oil dropped below $81 a barrel from an eight-week high as the dollar recovered yesterday's losses against the euro, limiting investors' demand for commodities as a hedge against inflation.
U.S. crude inventories increased by two million barrels last week, according to a Bloomberg News survey of analysts before an Energy Department report tomorrow. The American Petroleum Institute was due to release stockpiles data later yesterday.
"It's a short-term movement before the inventory numbers," said Thina Saltvedt, a commodities analyst at Nordea Bank AB in Oslo. "Inventories are still high."
Crude oil for April delivery dropped as much $1.71, or 2.1 per cent, to $80.16 a barrel in electronic trading on the New York Mercantile Exchange. It was at $80.55 at 1:25 p.m. London time after rising on Monday to $81.87, the highest settlement since January 11.
Brent crude oil for April delivery dropped as much as $1.77, or 2.2 per cent, to $78.70 a barrel on London's ICE Futures Europe exchange.
Commercially held U.S. crude inventories have risen for five weeks to 341.6 million barrels, the highest since August, last year. That's 5.7 per cent above the five-year average level, according to the Energy Department. Gasoline stockpiles probably rose by 150,000 barrels from 231.9 million last week.
"Today's API data will be a reminder of weak fundamentals," Carsten Fritsch, a commodity analyst at Commerzbank AG, said by phone from Frankfurt.
Gasoline stockpiles climbed 773,000 barrels in the week ended February 26 as heavy snow across the U.S. East Coast kept drivers off the roads. For the week to March 5, six of 12 analysts surveyed anticipated an increase, five predicted a drop and one said supplies were unchanged.
Distillate fuel inventories probably decreased one million barrels, the survey showed. Stockpiles including heating oil and diesel previously fell to 151.8 million, 18 per cent above the five-year average.
The department will release its Weekly Petroleum Status Report tomorrow at 10:30 a.m. in Washington.
The dollar was at $1.3562 a euro at 1:08 p.m. in London, compared with $1.3634 on Monday in New York. The greenback has gained 5.3 percent this year against the euro as a deficit crisis in Greece fueled concern over government debt in Europe.
The dollar, oil and equities have rebounded from a year ago, when the Standard & Poor's 500 Index fell to its lowest since the collapse of Lehman Brothers Holdings Inc. Oil is up 71 per cent, and the S&P Index has risen 68 per cent since March 9, last year.
Source:© Copyright Guardian
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