NYMEX-U.S. crude drops 2 pct as Saudi tries to soothe market

Tue Mar 20, 2012 5:02pm EDT

* Saudi Arabia pumping 9.9 mln bpd, inventories full-Naimi
    * Dollar strengthens, helps pressure oil
    * Coming up: EIA oil data 10:30 a.m. EST Wednesday

    NEW YORK, March 20 (Reuters) - U.S. crude futures fell more
than 2 percent on Tuesday after Saudi Arabia provided details
about high production levels, saying there was no supply
shortage and that the kingdom could boost output more to meet
any supply shortage.	
    A stronger dollar and intraday share price weakness added
pressure as the U.S. April crude contract headed to expiration
at the end of the session.	
    The dollar gained across the board, bolstered by safe-haven
demand spurred by worries about a potential slowdown in China,
which dragged down both European and U.S. equities. 	
    Saudi Oil Minister Ali al-Naimi said the kingdom had met all
its customers' requests for oil, was now pumping 9.9 million
barrels per day and stood ready to raise output to full capacity
of 12.5 million bpd, if needed. 	
    Crude futures had already felt some pressure from news that
Kuwait's ruler said during a visit to Japan that Iran has given
assurances it will not try to close the vital Strait of Hormuz
shipping route. 	
    Sheikh Sabah al-Ahmad al-Sabah said Kuwait nevertheless had
been working for "a long time" on building up oil stocks outside
the Gulf to ensure steady supplies to customers.	
    The flurry of market-soothing activity by Gulf OPEC states
comes as Iran faces tightening economic sanctions and an embargo
on oil exports to the European Union slated for July, as the
West tries to force Iran to submit to inspections of its
controversial nuclear program.	
    Kuwait and Saudi Arabia also may be eyeing the
faster-than-expected recovery of Libyan oil production after its
civil war and rising post-war production from Iraq, as consumers
look for alternative supplies to Iran, oil trading sources said.
  	
    Crude futures showed little reaction to news that U.S. crude
oil stocks fell 1.4 million barrels last week, according to a
report released after crude prices settled by the industry group
American Petroleum Institute, against expectations stockpiles
would be higher. 	
    Gasoline stocks fell 1.4 million barrels and distillate
stocks rose 596,000 barrels.	
    U.S. crude oil inventories were expected to have risen last
week, by 2.4 million barrels, a Reuters survey of analysts taken
ahead of the API report showed. 	
    Gasoline stocks were expected to be down 1.9 million
barrels, with distillate stocks pegged to be lower by 1.6
million barrels.	
         	
    FUNDAMENTALS	
    * On the New York Mercantile Exchange, expiring April crude 
 fell $2.48, or 2.29 percent, to settle at $105.61 a 
barrel, having traded from $105.35 to $107.91.	
    * NYMEX May crude, now in the front-month position,
fell $2.49, or 2.29 percent, to settle at $106.07 a barrel.	
    * Australian iron ore miners, key beneficiaries of China's
recent industrial revolution, signaled demand growth was finally
slowing in response to Beijing's moves to cool its economy.
 	
    * France and Germany oppose a release of oil reserves,
officials from both countries said. 	
    * Permits for U.S. homebuilding neared a 3-1/2 year high in
February, though groundbreaking activity slipped 1.1 percent, 
Commerce Department data showed. 
    * Economic reforms in Europe will take time to take hold and
growth in crisis-hit euro-zone member states will remain weak
for a long time, U.S. Treasury Secretary Timothy Geithner told a
hearing of the U.S. House Financial Services Committee.   
 
    * PBF Energy's 182,000 bpd refinery in Delaware City,
Delaware, was seeing minimal impact to production after a Friday
fire in a desulfurization unit, sources said. 
    * Technical problems have halted exports from Iraq's new oil
export terminal for the past week after it loaded 2 million
barrels of oil on a tanker, the terminal's first ship, which
marked a major increase in export capacity. 	
    * Rebel fighters fled the eastern Syrian city of Deir al-Zor
in the face of a fierce army assault, as Russia issued its
toughest criticism yet of President Bashar al-Assad's handling
of the year-long revolt. 	
    * Venezuela's Oil Minister Rafael Ramirez said that U.S. and
British plan to tap strategic oil reserves was unsustainable in
the long term and would only have a limited impact on prices.
 	
    * The leader of Iraq's autonomous Kurdish region delivered a
sharp denunciation of the central government that included a
veiled threat to reconsider relations with Baghdad.
 	
    	
    MARKETS NEWS	
    * A warning about China's growth sparked selling in energy
and industrial shares, but the broad market's losses were
contained, a sign of resilience for U.S. stocks. 	
    * Copper posted its sharpest decline in two weeks as the
dollar strengthened and concerns about the scale of China's
economic slowdown escalated, setting prices of the industrial
metal back into a familiar range. 	
    * Gold fell amid selling prompted by lower crude and equity
markets and a spate of positive U.S. economic data that has
eroded hopes of more monetary easing by the Federal Reserve.
 	
       	
    UPCOMING DATA/EVENTS	
    * U.S. Energy Information Administration oil inventory data
due at 10:30 a.m. EDT (1430 GMT) on Wednesday.	
    * U.S. jobless claims data due at 8:30 a.m. EDT (1230 GMT)
on Thursday.	
    * U.S. Energy Information Administration natural gas storage
data due at 10:30 a.m. EDT (1430 GMT) on Thursday.  	
    	
        SETTLE     NET    PCT     LOW    HIGH  CURRENT  DAY AGO
                  CHNG   CHNG                      VOL      VOL
 CLc1   105.61   -2.48  -2.3%  105.35  107.91   27,906  110,353
 CLc2   106.07   -2.49  -2.3%  105.70  108.37  320,013  237,022
 LCOc1  124.12   -1.59  -1.3%  123.20  125.44  177,992  128,753
 RBc1   3.3631 -0.0047  -0.1%  3.3187  3.3683   40,968   40,371
 RBc2   3.3513 -0.0105  -0.3%  3.3099  3.3570   55,737   39,652
 HOc1   3.2367 -0.0246  -0.8%  3.2038  3.2524   36,584   48,046
 HOc2   3.2499 -0.0260  -0.8%  3.2188  3.2667   37,330   39,855
                                                                
 TOTAL MARKET            VOLUME                 OPEN  INTEREST
              CURRENT    Mar 19   30D AVG     Mar 19  NET CHNG
                             #VALUE!
 RBOB         178,655   138,148   140,177    388,573     1,320
 HO           123,495   144,507   147,887    288,875     6,529
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