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Crude Oil Futures Tumble

The April contract falls 2.6%.

Updated from 1:04 p.m. EST

Energy futures fell on Friday at the New York Mercantile Exchange as an anticipated easing in gasoline prices lured crude lower.

The April contract for light sweet crude oil closed the session 2.6% lower at $60.04 a barrel. Crude prices ended the week even. Reformulated gasoline was down 3 cents at $1.90 a gallon, and heating oil slipped 5 cents to $1.71 a gallon.

The near-term contract for natural gas fell 16 cents to $7.08 per million British thermal units.

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Crude oil and gasoline futures fell despite figures released this week showing a tightening of inventories. News about rising violence in the Nigerian Delta and a sabotaged pipeline in the region also failed to support crude prices.

According to Max Pyziur, energy analyst at CPM Group in New York, energy futures markets and recent inventory numbers reported by the Energy Information Administration are sending mixed signals to traders.

Spreads between near-month futures contracts and contracts that are further out, known as calendar spreads, can indicate how market participants view the direction commodity futures will move, says Pyziur. Larger spreads account for unknown future risks that could affect markets. Narrow spreads suggest that markets in the near term will be tight, possibly because of risks to supplies of commodities.

"In early March, the calendar spread curve for gasoline was flat, which indicated that traders were anticipating a near-term tightening of gasoline supplies," Pyziur says. "The curve is beginning to normalize, suggesting that worries of tight supplies in the short term are easing. This sentiment is moving up the supply chain and lowering crude prices today," he said.

The notion that gasoline and crude oil markets may be easing runs counter to the EIA inventory numbers released Wednesday that were extremely bullish. Gasoline inventories fell by 3.8 million barrels the previous week, whereas analysts had predicted a 400,000 draw. The EIA figures sent gasoline and crude prices soaring.

Also influencing markets was the impending meeting of the Organization of Petroleum Exporting Countries. OPEC will meet next Thursday to decide whether it will adjust quotas for the export of crude oil. Most analysts expect that it will stand pat on current production levels.

Elsewhere, energy stocks were mostly higher. The

iPath Goldman Sachs Crude Oil

(OIL) - Get Report

ETF was down 2.3% at $36.71.

Exxon Mobil

(XOM) - Get Report

edged 1% higher to $71.14.


(COP) - Get Report

was 23 cents higher at $67.80. Shares of


(CVX) - Get Report

finished the day unchanged at $68.46.


(HAL) - Get Report

was upgraded by Calyon Securities from neutral to add, and its stock target price was raised from $36 to $41. Halliburton was up 0.8% cents at $32.

Verasun Energy


was upgraded by Thomas Weisel from underweight to market weight, and its stock jumped 2.9% to $17.95.

Provident Energy Trust


was upgraded by BMO Capital Markets from underperform to market perform, and its shares advanced 0.5% to $10.67.