Oil falls under $81, eyes EIA data on stocks

By Jo Winterbottom

LONDON (BestGrowthStock) – Oil paused around $1.30 lower after slipping under $81 on Wednesday as investors waited to see if U.S. energy department figures due at 1430 GMT would confirm a bearish build-up in crude stocks.

Sentiment was undermined further by concerns over the fragility of a global recovery as Portugal’s sovereign credit rating was downgraded, underlining worries Greece’s debt problems could move to other euro zone areas.

U.S. crude oil futures for May touched a low of $80.35 a barrel and by 1237 GMT (8:37 a.m. EDT) were trading down $1.34 at $80.57. It has traded between $69 and $84 so far this year. London ICE Brent for May was down $1.37 at $79.33 after earlier dipping to a low of $79.20.

U.S. crude stockpiles jumped 7.5 million barrels in the week ended March 19, five times as much as forecast in a Reuters poll, the American Petroleum Institute (API) said on Tuesday.

Supplies of distillates including heating oil and diesel fell 2.5 million barrels while gasoline stocks were little changed.

“It was a huge build in crude stocks,” said Amrita Sen of Barclays Capital in London. “It’s the primary piece of information the market is trading on ahead of the energy department figures.”

The U.S. Energy Information Administration (EIA) publishes its figures on Wednesday at 1430 GMT (10:30 a.m. EDT).

Oil inventories could have less influence on prices, however, than equities.

EURO ZONE WORRIES WEIGH

Fitch Ratings cut Portugal’s sovereign credit rating by one notch to AA- in a move which put further pressure on the euro against the dollar.

Data in the euro zone painted a mixed picture on the economy, with manufacturing activity growing in March at its highest level since the end of 2006 but industrial orders in January falling, underscoring the fragility of the economic recovery.

Dollar fluctuations, however, are seen by analysts as having less impact on crude oil prices as fundamental concerns come further into focus.

Petromatrix analysts said they would look to the gasoline crack — the theoretical premium refiners get for making gasoline from crude — for crude price indications this week.

The gasoline crack touched a high for 2010 around $14.60 earlier this week and is now just under $13. Demand often rises going into the U.S. summer as drivers take off on holiday.

“With plenty of stocks and relative values that are favoring (making gasoline), the U.S. consumer will have to drive a long way before putting the supply capacity at risk,” said Petromatrix in a report.

Stock Market Today

(Editing by Sue Thomas)

Oil falls under $81, eyes EIA data on stocks