Crude Futures on the Decline

Crude oil and distillate futures were trading lower Wednesday after the Energy Information Administration reported declines in U.S. oil inventories.

Following a dollar advance to $59.85 in early action, the near-term crude oil contract slid heavily after the EIA inventory figures were published. At 2:45 p.m. EST, crude oil was trading at $57.80, down $1.08 on the session, according to the New York Mercantile Exchange.

Heating oil futures were down nearly 2 cents to $1.67. Gasoline was off 3 cents to $1.54.

Natural gas continued to receive upward support, trading 9 cents higher at $7.71. The EIA will release inventory figures for natural gas Thursday morning.

U.S. crude inventories dropped by 400,000 barrels during the week ended Feb. 2, according to the EIA report. Although that was well below the 2.2 million-barrel build that analysts had expected, it still sent prices for crude oil and its distillates falling.

Crude oil has hovered just below the $60 level in recent days, caused in part by freezing temperatures blanketing much of the country. Although temperatures remain in the mid-teens for much of the Eastern seaboard, they are expected to increase moderately through the remainder of the week. This will likely alleviate upward price pressure on fossil fuels.

Higher-than-expected supplies of oil are also preventing crude from climbing beyond its intermediate-term price caps, according to Edward Meir, who writes The Man Energy Daily Report.