NEW YORK (
) -- Crude oil futures managed to close above $84 a barrel Tuesday after dropping as low as $82.51 a barrel ahead of inventory that's expected to show another build in crude supplies.
After the close of Tuesday's trading session, the American Petroleum Industry reported a 1.41 million barrel rise in crude oil inventories for the week ending April 9. Analysts, according to a poll conducted by Platts, had been looking for a build of 1.6 million barrels.
The report will be followed up with data from the government's own Energy Information Administration on Wednesday morning. Gasoline stockpiles are projected to show a decline of 1.26 million barrels while distillates are slated to show an additional 1 million barrels, according to estimates.
Phil Flynn, energy analyst at PFGBEST, said continually swelled inventory levels are catching up to prices.
Although the May delivery crude contract plunged into $82-a-barrel territory Tuesday, it managed to lose only 29 cents, or 0.3%, during the session. It settled at $84.05 a barrel.
Adding to the fundamental picture, the International Energy Agency boosted its 2010 demand forecast by 30,000 barrels a day from last month's estimates, but suggested the world's market for crude may be "overheated," according to a report from the
. The group said inflated prices could hinder economic recovery efforts.
"I think, more than anything, there's a sudden realization by the world that there's plenty of oil out there," Flynn said. "Inventories are the anchors that may pull the market back down. As much as they tried to ignore it last week, it's going to be harder and harder to justify the higher prices."
"Based on expectation of demand, there's still plenty of oil out there," he continued. "And it looks like the market is coming back down to earth and refocusing on fundamentals ahead of the summer driving season."
Stocks closed marginally higher Tuesday after shrugging off a less-than-stellar earnings announcement from
wider-than-expected trade gap
in February. Energy and basic materials were the day's weakest sectors. The Philadelphia Oil Service Sector index lost 1.1%, while the NYSE Arca Oil index fell 0.3%.
(CVX - Get Report)
slipped 0.3% lower to $80.21 and
(XOM - Get Report)
fell 0.1%, to $68.66.
Key service names, however, were dropping more precipitously than their integrated brethren.
(CAM - Get Report)
(NOV - Get Report)
ended the session more than 2% lower.
(OII - Get Report)
slumped 0.8% at the close and
(BHI - Get Report)
Elsewhere on the Nymex, the May natural gas contract surged 3.8% higher, adding 15 cents to settled at $4.16 per million British thermal units. May heating oil lost nearly a penny, or 0.2%, to settle at $2.2 a gallon, while May gasoline added a penny, or 0.6%, to settle at $2.31 a gallon.
-- Written by Sung Moss and Melinda Peer in New York