Crude drops on demand worry, fading hope for stimulus
NEW YORK (Reuters) - Crude futures fell on Tuesday as worries about lackluster demand and fading prospects for more monetary stimulus from the U.S. central bank countered concerns about potential supply disruptions.
Federal Reserve policymakers appear less inclined to implement any more monetary stimulus as the U.S. economy gradually improves, according to minutes for the central bank's March meeting.
Oil prices also felt pressure from news that, according to industry sources, Saudi Arabia is likely to maintain high oil production in the event consumer countries release strategic oil reserves.
U.S. retail gasoline demand fell 0.7 percent last week versus the previous week and was down 3.5 percent compared to the year-ago period, MasterCard said in its weekly report.
But the dismal demand report did not prevent RBOB gasoline futures from settling higher. Gasoline has been supported by inventory drops as fuel with winter specifications is drawn down. Also, recently shut U.S. refineries and maintenance at others provided support.
U.S. crude oil inventories rose 7.8 million barrels in the week to March 30, the industry group American Petroleum Institute said on Tuesday, a much larger increase than expected. <API/S>
Gasoline stocks fell 4.5 million barrels and distillate stocks fell 1.4 million barrels, the API said.
Ahead of weekly reports on U.S. oil inventories, crude oil stocks were expected to have risen last week by 2.2 million barrels, a Reuters poll of analysts showed.
Gasoline stockpiles were expected to be down 1.4 million barrels and distillate stocks were estimated to be down 400,000 barrels, the survey showed. Continued...