Persistent production outages in Libya and South Sudan capped losses
in Brent while U.S. oil was pressured by sinking gasoline futures
prices in the face of lessening demand for the fuel.
U.S. weekly crude stocks rose by a less-than-expected 822,000
barrels in the week to Feb. 21, according to data from the American
Petroleum Institute released Tuesday. A preliminary Reuters poll
forecast an increase of 1.2 million barrels.
Oil stocks at Cushing, Oklahoma, the benchmark delivery point for
the U.S. oil futures contract, fell by 1.1 million barrels, API data
showed. Still, traders said that oil simply moved from one location
to another along the Gulf Coast as refiners enter maintenance season
and demand for crude oil wanes.
"They're just moving those barrels south and that's putting pressure
on the market," said Bob Yawger, director of commodities futures at
Mizuho Securities in New York.
The U.S. Energy Information Agency will release its inventory report
Wednesday at 10:30 a.m. EST (1530 GMT).
Worries of slower growth in China worsened as the yuan fell more
than 1 percent against the U.S. dollar.
Brent crude fell $1.13 to settle at $109.51 a barrel, after settling
at its highest level this year in the previous session. U.S. oil
fell 99 cents to settle at $101.83 per barrel, after falling nearly
$2 earlier in the session.
Brent's premium to U.S. crude <CL-LCO1=R> widened to $8.85 on
Tuesday, before tightening to settle just 14 cents wider at $7.68.
On Monday, the spread narrowed to a nearly five-month low of $7.04,
but failed to pass several key resistance levels around $7, analysts
A stronger U.S. dollar bolstered by comments from a top Federal
Reserve regulator that the central bank will continue monetary
tightening in the future also weighed on U.S. crude and commodities
priced in the dollar.
U.S. heating oil erased earlier losses and rose on forecasts for
more extreme cold in the near-term, analysts said. New York
ultra-low sulfur diesel futures (ULSD), commonly known as heating
oil, rose 1.71 cents to settle at $3.1043 per gallon.
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RBOB gasoline prices for March, which expire on Friday, fell 3-1/2
cents to settle at $2.7981 per gallon.
"The next two weeks shows freezing weather and the distillate market
is tight enough that the rally should continue," said Rich Hastings,
macro strategist with Global Hunter Securities.
Gasoline futures are "looking for a bit firmer signals," he added.
Gasoline stocks fell by 314,000 barrels, while distillate stockpiles
fell by 693,000 barrels, API data showed.
Brent oil drew support from supply outages in Africa. Libya has put
some government departments under special spending rules as a slump
in oil revenue has hampered the drafting of a budget for this year.
Protests at oilfields and ports have knocked oil production down to
230,000 barrels per day (bpd) from 1.4 million bpd in summer.
Fighting in South Sudan has seen oil output fall by a third since
December to about 170,000 bpd last week.
(Additional reporting by Lin Noueihed
and Shadi Bushra in London and Manash Goswami in Singapore; editing
by Mark Heinrich, Marguerita Choy and Matthew Lewis)
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