Crude oil lower as concerns eased over supply disruptions in Canada
NEW YORK -- Crude oil futures were slightly lower Tuesday as concerns eased over supply disruptions in Canada and traders watched for signs of stability in Chinese markets.
Light, sweet crude for August delivery recently traded down 10 cents, or 0.11%, at $95.08/bbl on the New York Mercantile Exchange. ICE North Sea Brent Crude Oil for August delivery traded 1 cent higher at $101.17/bbl.
Disruptions in the supply of oil from Canada, the U.S.'s biggest source of foreign oil, had caused oil prices to settle higher Monday.
Heavy rains and flooding in Canada prompted Canadian pipeline operator Enbridge to shut down pipelines over the weekend after it detected an oil spill of about 750 bbl. But some analysts believe prices moved too high, too quickly, on the Enbridge shutdown.
"The market has been schizophrenic. It is seeing a little bit of pullback from yesterday," said Kyle Cooper, managing partner of IAF Advisors. "It didn't seem like a reasonable reason to move that high yesterday."
Although operations at one of the pipelines have been restored, analysts said the market could expect some volatility as refiners may meet their needs by drawing on stockpiles in Cushing, Okla., a key oil depot.
Traders were also paying attention to the possibility of increased demand from the BP Whiting refinery, which has restarted a reconfigured crude distillation unit. Inventories at Cushing were at their lowest level in six months, according to Energy Information Administration data for the week ended June 14, and the Whiting restart could result in further declines, analysts said.
Meanwhile, expectations of financial stability being restored in China, the world's second-largest oil consumer, are keeping investors' attention.
On Monday, China's central bank had said it would not intervene to resolve the country's credit crunch. The rates at which banks lend to each other had recently spiked. But Tuesday it said it would "guide market interest rates into a reasonable range", which analysts said had helped calm the oil market which was pressured by worries of slowing demand.
Front-month July reformulated gasoline blendstock, or RBOB, recently traded 0.55 cent higher at $2.7431/gal. July ULSD heating oil recently traded 0.78 cent higher at $2.8625/gal.
Dow Jones Newswires