Oil fell to stay below $75 on Tuesday as forecasts for a seventh straight weekly gain in distillate fuel inventories at top consumer the United States tempered expectations of a drop in crude stockpiles. Forecasts for a fourth consecutive weekly fall in crude supplies and strong U.S. corporate earnings had boosted U.S. light, sweet crude by as much as 43 cents to $75.38 a barrel earlier on Tuesday, before prices retreated 10 cents to $74.85. WTI touched $76.48 Friday, the highest price this month. London Brent crude also slipped. U.S. crude stockpiles probably fell by 2 million barrels in the week to July 9, a Reuters survey showed, after tumbling 5 million barrels a week earlier because of shutdowns and shipping disruptions related to Hurricane Alex.
"We shall expect more hurricanes this season, so at this point we should pay more attention to the level of stockpiles," said Keichi Sano, general manager of research at SCM Securities in Tokyo. U.S. distillate inventories likely rose by 700,000 barrels, while gasoline probably added 300,000 barrels. The industry group American Petroleum Institute will release its weekly inventory report on Tuesday at 2030 GMT, followed by government statistics from the Energy Information Administration on Wednesday at 1430 GMT. Sano also pointed out that market participants were also watching stock markets and euro events more than fundamentals for trading cues.
Japan's Nikkei average edged up 0.5 percent on Tuesday as investors took heart from Alcoa's stronger-than-expected quarterly profit reported after the close of U.S. trade, while the euro consolidated well below two-month peaks against the dollar. BP said it had installed a cap meant to halt the flow of oil from its ruptured Gulf of Mexico well on Monday and the Obama administration issued a new moratorium on deepwater oil drilling. "BP's oil leakage trouble does not necessarily give a bullish impact to the back of the (forward price) curve," Sano said. "If deepwater developments are prohibited, then other forms of non-conventional gas and crude oil production can compensate."
