By Myra P. Saefong, MarketWatch , Jenny W. Hsu
Oil futures fell Thursday for the first time in four sessions, with West Texas Intermediate crude failing to settle above $35 a barrel, a key level.
Traders weighed the possibility that major producers may come to an agreement this month to stabilize crude output levels. They also took cues from mostly downbeat U.S. economic data and a weekly U.S. government report out Wednesday that showed both a larger-than-expected rise in crude supplies and a decline in total domestic production.
On the New York Mercantile Exchange, April West Texas Intermediate crude /zigman2/quotes/209724538/delayed CLJ26 0.00% fell 9 cents, or 0.3%, to settle at $34.57 a barrel, after earlier tapping a high of $35.32. Futures gained Wednesday, which marked a third straight daily rise, to end at the highest level in roughly two months.
A close above $35 for WTI would have opened the gates for a further climb, according to Jameel Ahmad, chief market analyst at FXTM.
On London’s ICE Futures exchange, Brent crude added 14 cents, or 0.4%, to close at $37.07 a barrel.
“We’re going to continue to see choppy price action as a battle rages between the ongoing bearish backdrop of oversupply versus glimpses of rebalancing and hopes of [Organization of the Petroleum Exporting Countries] coordination,” said Matt Smith, a commodity analyst at ClipperData.
The U.S. Energy Information Administration on Wednesday reported a 10.4 million-barrel increase in crude stockpiles, but also said that domestic output fell by 25,000 barrels to 9.077 million barrels a day.
“The macro environment has been firm” and as long as it stays this way, prices will continue to rise “given the U.S. production numbers confirm what the rig-count data has been suggesting,” said Tim Evans, chief market strategist at Long Leaf Trading Group.
Meanwhile, Venezuela has said that 15 countries will attend a meeting of oil producers this month to discuss a plan to freeze output, according to news reports.
“Traders are willing to believe a meeting could take place this month, but there is a lot of healthy skepticism out there over whether anything may actually come out of it,” said Colin Cieszynski, chief market strategist at CMC Markets, in a note.
On Nymex, April gasoline fell by 1.2 cents, or 0.9%, to $1.299 a gallon, while April heating oil tacked on 1.4 cents, or 1.2%, to $1.12 a gallon.
“Crude seems to be increasingly discounting bearish news and data including rapidly rising inventory levels,” said analysts at Macquarie, in a note Thursday. But market fundamentals suggest that the recent rally was too early, and “we expect crude to retrace to the $30 per barrel range.”
Economic data in the U.S. was mostly downbeat Thursday, boding ill for the outlook on energy demand. Jobless claims rose by 6,000 to 278,000 in the last week of February, the Institute for Supply Management said the U.S. service sector grew more slowly in February, and factory orders in January rose by a weaker-than-expected 1.6%.
Natural-gas prices ended lower after the EIA reported that supplies of the commodity fell by 48 billion cubic feet for the week ended Feb. 26.
That was more than the fall of between 37 billion and 41 billion cubic feet expected by analysts polled by Platts. But Beth Sewell, managing partner at Quantum Power & Gas Services, said “fundamentals continue to be bearish with a huge storage balance in tank and moderating temps following the winter that wasn’t.”
April natural gas settled at $1.639 per million British thermal units, down 3.9 cents, or 2.3%, holding ground at a 17-year low.
<STRONG>Georgi Kantchev contributed to this report.</STRONG>