The price of oil fell slightly Tuesday as traders weighed encouraging housing data against the prospect of rising crude supplies in the United States.
Benchmark oil for April delivery fell 27 cents to $93.84 a barrel in midday trading on the New York Mercantile Exchange. Brent crude, used to price many kinds of oil imported by U.S. refineries, dipped 56 cents to $108.95 per barrel on the ICE Futures exchange in London.
The Commerce Department said builders broke ground on homes last month at a seasonally adjusted annual rate of 917,000, up from 910,000 in January and the second-fastest pace in 4 1/2 years. Building permits also increased in February, rising by 4.6 per cent to 946,000, the most since June 2008.
On Wednesday the Energy Department’s Energy Information Administration is expected to report an increase of 2 million barrels in crude oil supplies and a drop of 2.5 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
U.S. oil production, at more than 7 million barrels a day, is at the highest level in 20 years.
Energy market investors are watching developments in Cyprus, where lawmakers have sought to tax bank accounts to stabilize its financial sector and clear the way for a massive international bailout. That has prompted fears of a run on banks across Europe, with accountholders questioning the sanctity of what they had considered safe places for their savings.
Analysts at Frankfurt’s Commerzbank, while noting that “the upside potential is likely to remain limited” until the uncertainty over Cyprus subsides, also pointed out that the lack of alternative investment opportunities could support crude prices.
“The continuing high liquidity among investors, coupled with their willingness to take risks, is likely to lend support also to the commodities markets in the coming months,” Commerzbank said.
Natural gas rose again Tuesday, supported by forecasts for cold weather through the end of March. “Gas prices which have rallied 84 cents or nearly 27 per cent in a little more than a month as strong end-of-season weather factors and dwindling inventories have boosted the market to levels not seen since the end of October, 2011,” independent energy analyst Addison Armstrong noted.
Natural gas futures rose 3 cents to $3.94 per 1,000 cubic feet in midday trading.
In other energy futures trading on the Nymex:
— Wholesale gasoline lost 4 cents to $3.09 a gallon.
— Heating oil fell 4 cents to $2.89 a gallon.