Benchmark crude-oil futures retreated modestly in electronic trade early Wednesday, paring their gains ahead of key inventory data.
Crude for March delivery gave back 13 cents or 0.1% to trade at $96.55 a barrel, trimming a 64-cent advance during Tuesday’s regular New York Mercantile Exchange session.
Similarly, rival benchmark Brent crude saw its March contract lose 26 cents, or 0.2%, to sit at $112.16 a barrel on ICE Futures.
Tuesday’s rise for Nymex crude came on the back of a weakening U.S. dollar, which tends to support dollar-denominated oil prices. But the greenback halted its decline Wednesday, with the ICE dollar index edging up fractionally to 79.900 from 79.892 late Tuesday.
Still, the March Nymex futures — which became the front-month contract after Tuesday’s close — remained well above its levels a week earlier, when it traded below $95, and significantly improved from its sub-$93 levels at the start of the month.
However, Citi Futures analysts sounded a skeptical note on the gains.
“Although the oil market continues to probe the upside, we see this as more a function of trade flow than a comprehensive bullish fundamental case,” they said late Tuesday.
“Some of this buying may be technically motivated, with trades buying the market because they see it going up, and the market going up because they are buying it,” Citi Futures said, also noting a recent correlation with gains for the S&P 500 stock benchmark.
They described Nymex crude as “becoming overvalued, with a reduced upside potential and increased downside risk.”
The oil market’s focus was likely to turn to weekly U.S. inventory data due up later in the day from the American Petroleum Institute, followed Thursday morning by inventory report from the Energy Information Administration, often seen as more definitive.
While oil slipped lower, other energy futures saw less movement.
February gasoline sat little changed at $2.83 a gallon, and February heating oil was also little changed at $3.05 a gallon.
February natural gas rose, tacking on 2 cents to trade at $3.58 per million British thermal units after a fractional loss on Tuesday.
Marketwatch
