U.S. crude oil futures ended lower for the fourth day in a row on Tuesday, dragged down by a
slide in the equities markets amid worries over the subprime mortgage lending sector, analysts said.
Traders also squared books ahead of government oil inventory data due Wednesday morning that were forecast to show another weekly build in crude supplies.
Gasoline and heating oil futures pared their gains for the day, which they garnered on forecasts for stock draws in the inventory report. Traders also cited fresh refinery problems.
Prices rose early on a report from the International Energy Agency, adviser to 26 industrialized nations, saying the world would need extra oil from the Organization of Petroleum Exporting Countries in the coming months.
Crude for April delivery settled down 98 cents, or 1.7%, at $57.93 per barrel on the New York Mercantile Exchange, trading between $57.75 and $59.95. The day's low was the lowest since prices fell to $57.32 on Feb. 20.
In four days, the contract has fallen $3.89, or 6.3%. Resistance is charted at $62. Support yielded at $59.
"The sharp fall in the U.S. stock market, caused by worries on the subprime mortgage lending sector, also touched off selling in crude as it revived fears of an economic slowdown," said Phil Flynn, analyst at Alaron Trading in Chicago.
Earlier, Tom Knight, a trader at Truman Arnold in Texarkana, Texas, said that crude was backtracking on crack-spread trading.
"There's really plenty of crude around and the (supply) tightness is really on products," said Knight.
In London, April Brent crude settled up 16 cents, or 0.3%, at $60.90 a gallon, trading $60.50 to $62.11.
Meanwhile, NYMEX April RBOB settled 2.13 cents higher, or 1.1%, at $1.9318 a gallon, trimming gains as crude fell sharply near the close. The gasoline contract earlier hit a session high of $1.955, which marked the loftiest level since $1.8565 on Aug. 23, 2006. It traded as low as $1.913. Support is pegged at $1.85.
Gasoline's strong surge was helped by fresh refinery problems. In the latest hitch, Valero shut a gasoline-making unit at its St. Charles, Louisiana, refinery.
The Valero glitch came after earlier reports about a fire that hit Chalmette Refining's refinery in Louisiana and news that Chevron's overhaul of its San Francisco Bay area refinery would be extended by three weeks after a fire.
"Persistent refinery problems in the U.S. and those that have also affected units in Canada and Venezuela are affecting gasoline trade," said Andrew Lebow, a broker at Man Financial in New York.
"At the same time, demand for gasoline is strong while imports are down," he added.
NYMEX April heating oil slashed its gains for the day, ending up 0.79 cent, or 0.5%, at $1.6902 a gallon, after trading $1.683 and $1.729. Resistance is slated at $1.75 while support rests at $1.65.
OPEC is preparing to meet in Vienna on Thursday to review policy and is widely expected to keep current production levels unchanged. The group is expected to emphasize stricter compliance to agreed cuts, which were in two stages, totaling 1.7 million barrels per day.
Kuwait's energy minister, Sheikh Ali al-Jarran al-Sabah said on his arrival in Vienna that OPEC was likely to keep its oil output unchanged.
A top Libyan oil official said the petroleum market was balanced and OPEC should hold off making any change to production levels.
"Preliminary data suggest that OECD stocks have fallen by over 1.26 million bpd over the first two months of the year, and could be heading for the largest first quarter stock draw for over 10 years," the Paris-based IEA said in its report.
"In reality, stock trends and prices are signaling that higher OPEC exports will be needed in the months ahead," it said.
The EIA report also said OECD oil stockpiles are set for their largest drawdown in a decade in the first quarter due to an extremely cold February and the impact of the recent OPEC cuts.
For domestic inventory data due Wednesday morning, analysts in a Reuters poll forecast a crude stock build of 1.6 million barrels after the fog-related shipping delays at the Houston Ship Channel eased.
The expanded poll also called for gasoline stocks to show a draw of 2.4 million barrels, while distillates were expected to have dropped by 2.0 million barrels.
Refinery runs were expected to show an 0.5 percentage point increase, to 86.3% of capacity, the survey showed.