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Oil's Gains Wiped Out

Chuck Marvin

Energy futures finished Tuesday's trading session at the New York Mercantile Exchange mixed after a late-day selloff in U.S. equities spread weakness in to the crude market.

The April contract for oil closed down 98 cents to $57.93 a barrel. Gasoline climbed 2 cents to $1.93 a gallon, and heating oil edged up 1 cent to $1.69 a gallon.

Natural gas drifted 2 cents lower to $6.89 per million British thermal units.

Energy futures were initially bolstered by concerns about tightness in gasoline and crude inventories, but the collapse in the stock markets induced a late-day reversal for energy futures at the Nymex.

Softness in the financial sector led to the fall in U.S. shares, according to Tom Bentz, energy analyst at BNP Paribas Commodity Futures.

Prices for crude oil and gasoline have been vacillating since last week over conflicting signals concerning product supplies. After closing at a high of $61.82 a barrel on March 8, crude slumped during the previous three trading sessions.

Crude oil appeared strong in early action. "The passion is back in the oil markets after disappearing on Friday and Monday," said Phil Flynn, senior oil analyst at Alaron Trading, before the reversal in crude prices. Strength in the gasoline market was the primary catalyst for the move, Flynn said.

There were a number of factors supporting the move higher, according to Flynn. First were last week's inventory numbers released by the Energy Information Administration, which showed larger-than-expected draws from storage. The second was the latest monthly report by the International Energy Agency, which suggests that OPEC will soon need to boost oil exports to keep the market in balance.

News that oil tankers were unable to enter the Houston shipping channel because of fog and that a fire had broken out at a Venezuelan refinery over the weekend also influenced the markets, Flynn said

The spread between the April (near-term) crude contract and the May crude futures contract is now greater than $2. The abnormally large spread is due to refineries reducing their purchases of crude because of increased maintenance during April, according to Bentz.

Elsewhere, energy stocks were mostly higher. The iPath Goldman Sachs Crude Oil (OIL Quote) ETF fell 0.8% to $35.78.

ExxonMobil(XOM Quote) was down 1.4%. ConocoPhillips (COP Quote) slipped 1.0%, and Chevron (CVX Quote) was 1.4% lower.

Among other movers, electricity provider Entergy (ETR Quote) was upgraded by Jeffries from hold to buy. Its stock was 0.6% lower at $98.55.

Oil transport firm Tsakos Energy (TNP Quote) was downgraded by Forks Bank from buy to hold, but its stock moved 15 cents higher to $47.64.