Oil traded sideways Tuesday as the market assessed a steep plunge the day before and looked ahead to a U.S. energy report expected to show drops in heating oil and other distillate inventories.
Monday's drop of US$2.08 a barrel was attributed to moderating U.S. temperatures and expectations that there will be a crude surplus in the spring.
On Tuesday, light, sweet crude for March delivery fell 2 cents to US$57.79 a barrel in Asian electronic trading on the New York Mercantile Exchange.
Brent crude at London's ICE Futures exchange rose 15 cents to US$56.75 a barrel.
Traders are looking ahead to Wednesday's weekly U.S. inventory report. According to a Dow Jones Newswires survey, U.S. stocks of heating oil and other distillate fuels are expected to decline about 4 -5 million barrels below the 136.3 million barrels reported last week.
"The expected draw in distillates is due to the fact that we had more heating degree days in the week ended Feb. 9 than we had (in the comparable week) in the past five years," said Jason Schenker, an economist at Wachovia Corp.
Gasoline and crude stocks are both expected to rise in the data released by the U.S. Department of Energy's Energy Information Administration.
The U.S. winter chill of the past couple weeks, which drove prices briefly above US$60 on Friday, is expected to ease up by late February, leading traders to believe that heating fuel demand will weaken.
Also causing traders to sell, Hasan Qabazard, head of research for the Organization of Petroleum Exporting Countries, on Monday forecast a global surplus of crude supply over demand of some 300,000 barrels a day in the April-June quarter. The International Energy Agency has predicted a 2 percent drop in world oil consumption in the second quarter, reports AP.
Meanwhile, Saudi Oil Minister Ali Naimi suggested in an interview with The Wall Street Journal over the weekend that OPEC was not looking to make further production cuts.
In other Nymex trading Tuesday, natural gas fell 7.2 cents to US$7.154 per 1,000 cubic feet and heating oil rose marginally to US$1.6458 a gallon.
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