Crude oil futures fell on Tuesday as expectations that this week's reports will show US crude inventories rose again countered supportive news of Libyan oilfields being shut. Prices faltered after being lifted by news the Sarir and the nearby oilfields in Libya were shut by a power cut, dealing another blow to exports from the embattled Opec member nation.
-- US crude stocks seen rising last week: survey
Greece's euro zone partners approved the Greek government's reform plans, also lending support to oil, but the prospect of another build in US 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 in New York. Brent April crude fell 24 cents to settle at $58.66 a barrel, after reaching $60.30. US April crude 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 US ultra-low sulfur diesel (ULSD) futures eased on Tuesday. March ULSD plunged more than 18 cents, sharply reducing its premium 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 estimated US crude stocks, already at record levels, rose 4 million barrels last week.
Higher prices for crude further out on the calendar have created an incentive to store crude at the Cushing, Oklahoma, delivery point for the US futures contract. Scheduled refinery work and the possibility that a strike by US refinery workers might limit production has helped lift Brent's premium to US crude.
The Brent-US crude spread 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 stabilise around $60 a barrel and demand is showing signs of improving in Asia and other regions, a senior Gulf Opec delegate said on Tuesday. Opec delegates earlier told Reuters that the group had no plans to meet before June, countering a Financial Times report quoting Nigeria's oil minister as saying the country would call an extraordinary Opec meeting if prices dropped further.
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