NEW YORK (Reuters) - Crude oil futures fell on Tuesday as expectations that this week’s reports will show U.S. crude inventories rose again countered supportive news of Libyan oilfields being shut.
Prices faltered after being lifted by news the Sarir and nearby oilfields in Libya were shut by a power cut, dealing another blow to exports from the embattled OPEC member.
Greece’s euro zone partners approved Greece’s reform plans, also lending support to oil, but the prospect of another build in U.S. oil inventories highlighted an over-supplied market and countered the supportive news.
“The supply dynamic will be reinforced by the inventory reports and the data are simply too compelling to ignore, and it has consistently undermined the recent rallies,” said John Kilduff, partner at Again Capital LLC.
Brent April crude LCOc1 fell 24 cents to settle at $58.66 a barrel, after reaching $60.30. U.S. April crude CLc1 fell 17 cents to settle at $49.28, off a $50.33 intraday peak.
Ahead of Friday’s March contract expirations, a squeeze on benchmark U.S. ultra-low sulfur diesel (ULSD) futures eased on Tuesday.
March ULSD HOc1 plunged more than 18 cents, sharply reducing its premium HOc1-HOc2 to April ULSD.
“The fundamental backdrop is still bearish,” said Carsten Fritsch, senior oil and commodities analyst at Commerzbank in Frankfurt, adding there was a “huge over-supply in the market.”
A Reuters survey ahead of weekly reports estimated U.S. crude stocks, already at record levels, rose 4 million barrels last week.
Crude stocks rose 8.9 million barrels to 437 million last week, industry group the American Petroleum Institute said on Tuesday.
The U.S. Energy Information Administration will issue its data on Wednesday at 10:30 a.m. EST.
Higher prices for crude further out on the calendar have created an incentive to store crude at the Cushing, Oklahoma, delivery point for U.S. futures.
Stocks rose 2.4 million barrels at Cushing last week, the API said.
Scheduled refinery work and the possibility that a strike by U.S. refinery workers might limit production has helped lift Brent’s premium to U.S. crude.
The Brent-U.S. crude spread CL-LCO1=R narrowed on Tuesday to $9.38 a barrel based on settlements. It rose to $10.27 on Monday, its widest since March 2014.
Oil prices have started to stabilize around $60 a barrel and demand is showing signs of improving in Asia and other regions, a senior Gulf OPEC delegate said on Tuesday.
Additional reporting by Alexis Akwagyiram in London and Jane Xie in Singapore; Editing by Christopher Johnson, Dale Hudson, Peter Galloway, Steve Orlofsky and David Gregorio