LONDON (Reuters)-Oil eased on Tuesday as investors focused on expectations of another rise in U.S. crude inventories, a day after a flow of new fund money and supply concerns over Nigeria and Iran sent prices to a two-month high.
U.S. light sweet crude for May delivery dipped 46 cents to $66.28 a barrel, fading further from Monday’s $67.90 peak, a two-month high. London Brent crude slipped 54 cents to $66.30 a barrel.
A wave of fund buying lifted the market on Monday amid concern about Iran’s dispute with the West over its nuclear work and the prolonged loss of a quarter of Nigeria’s production, helping to push U.S. crude toward last year’s record high of
“Today, everyone has moved off those two stories a bit,” said Deborah White of SG SIB Commodities in Paris. “We’re expecting a build in crude, so it’s hard to simultaneously say crude is desperately short and U.S. stocks continue to build.”
A U.S. government report on Wednesday is expected to show a 900,000-barrel rise in crude stocks, but inventories of distillates are expected to fall by 1.5 million barrels and gasoline by 1.8 million barrels.
“The oil market has been wrestling with a slightly easier fundamental picture in the near term and a longer-term concern about event risk,” said Michael Coleman, managing director of Singapore-based hedge fund Aisling Analytics.
Commodities have rallied over the past week as investors allot more funds to the sector at the start of the second quarter, pushing copper and zinc to new highs and giving a fresh lift to oil prices weighed down by rising crude oil inventories.
“There’s money coming in and it’s big money,” said Leo Drollas, deputy executive director of the Center for Global Energy Studies in London. “These flows are huge.”
While U.S. crude supplies recently touched a seven-year high, dealers are anxious that the cut to Nigerian exports and growing demand heading into the summer driving season may erode inventories in the next few months.
Nigerian Minister of State for Petroleum Edmund Daukoru said on Monday that Royal Dutch Shell (RDSa.L) would restart its offshore 115,000 barrel-per-day (bpd) EA field in days, but that would still leave more than 400,000 bpd of production off line.
Oil industry and military officials said that additional naval patrols in the Niger Delta had not convinced Shell to restart its onshore Forcados production after a wave of militant attacks in the world’s eighth-largest exporter.
The Organization of the Petroleum Exporting Countries (OPEC) will meet informally during talks between oil consumers and producers in Qatar starting April 22.
But ministers say the cartel has little choice but to keep pumping at near full throttle with prices nearing the $70 mark.