Oil Prices Retreat After Rally

NEW YORK – Crude-oil futures fell Tuesday as traders took profits after oil prices advanced more than 13% in the past three trading sessions.
Light, sweet crude for September delivery recently traded down $1.05, or 1.5%, at $70.53 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 53 cents, or 0.7%, lower at $73.02 a barrel.
Oil prices rapidly rose from around $63 a barrel last Wednesday to more than $71 a barrel Monday, as promising economic data from China, Europe and the U.S. raised hopes that the world economy is in the early stages of recovery from the worst downturn in decades.
Tuesday's retreat signifies little more than the market taking a breather, analysts said. U.S. equities are also down slightly after hitting a 2009 high Monday, while the dollar is slightly stronger against the euro, bouncing back from its weakest point since December.
"We rallied really strong and now we see some money taken off the table after the $10 runup," said Gene McGillian at Tradition Energy.
Oil futures are close to the 2009 intraday high of $73.38 a barrel, set June 30, but may have trouble rising further. U.S. unemployment data for July are due out Friday and expected to show the jobless rate continuing to climb. Oil and product inventory data are scheduled for release Wednesday by the Department of Energy, with increases in crude and some fuel stockpiles expected.
Analysts forecast U.S. oil inventories to rise by 500,000 barrels, while gasoline inventories are seen dropping 1.3 million barrels and distillate stocks, including heating oil and diesel, rising by 800,000 barrels, according to a Dow Jones Newswires survey. Refinery utilization is expected to drop 0.7 percentage point to 83.9% of capacity.
"We are having (inventory) build after build and refineries running at lower capacity," said Tim Jennings, a broker at Vantage Trading. "I don't know why prices are higher. There is no factual confirmation that demand is picking up."
Front-month September reformulated gasoline blendstock, or RBOB, recently traded down 1.44 cents, or 0.7%, at $2.0549 a gallon. September heating oil traded 93 points, or 0.5%, lower at $1.8620 a gallon.

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