(Removes extraneous word in paragraph 19; no other change to
* U.S. Fed lowers volume on stimulus talk
* Saudi to maintain output level even if reserves tapped
* N. Sea platform problems, cargo delays curb Brent losses
* Coming up: EIA oil data 10:30 a.m. EDT Wednesday
By Robert Gibbons
NEW YORK, April 3 Oil fell on Tuesday as caution
over lackluster demand growth and fading expectations for more
monetary stimulus from the U.S. central bank countered concerns
about potential supply disruptions.
Federal Reserve policymakers appear less inclined to launch
a fresh round of monetary stimulus as the U.S. economy gradually
improves, according to minutes for the central bank's March
Oil prices also felt pressure from news that, according to
industry sources, Saudi Arabia is likely to maintain high oil
production in the event consumer countries release strategic oil
reserves, though the kingdom will not seek to attract buyers for
more oil by discounting its crude.
Already weighing on U.S. crude was Monday's report from the
Energy Information Administration showing U.S. oil demand in
January fell 4.5 percent year-on-year, with January gasoline
demand the weakest since 2001.
After both U.S. and Brent crude surged more than 2 percent
in the previous session, Brent's losses were limited by delays
to North Sea loadings and the tightening sanctions on Iran as
its dispute with the West over its nuclear program continues.
Light trading volume for Brent and U.S. crude contributed to
the choppy trading trajectory ahead of the long Easter holiday
weekend, even as prices remained stubbornly range-bound.
"Essentially the market is continuing the pattern we saw
last month, when it couldn't find a clear direction," said James
Zhang, energy analyst at Standard Bank. "Few people are willing
to aggressively short this market given the geopolitical risk."
Brent crude fell 57 cents to settle at $124.86 a
barrel, having slumped to $124.30, just below its 30-day moving
average of $124.36. The intraday peak was $125.97.
U.S. crude fell $1.22 to settle at $104.01 a barrel,
having traded from $103.59 to $105.18.
Brent's premium to U.S. crude CL-LCO1=R strengthened to
$20.85 based on settlements, reaching $20.99 intraday, the
highest since October, Reuters data showed.
Total trading volumes for Brent slightly outpaced U.S. crude
turnover. Brent dealings were 11 percent above the 30-day
average, while U.S. volume lagged the 30-day average by 15
The dismal EIA demand data and weak crude prices did not
prevent U.S. RBOB gasoline futures from continuing their
seasonal rise and settling higher.
Gasoline has been supported by inventory drops as fuel with
winter specifications is drawn down, while recently shut U.S.
refineries and maintenance at others also provided support.
U.S. retail gasoline demand fell 0.7 percent last week
versus the previous week and was down 3.5 percent compared to
the year-ago period, MasterCard said in its weekly report.
"Today's dichotomy between RBOB strength and crude weakness
appeared attributable to continued concerns over PADD 1 (U.S.
Northeast) supply availability and some rumored refinery down
time that had not been fully priced in," Jim Ritterbusch,
president at Ritterbusch & Associates, said in a note.
PADD 1 gasoline stocks fell 1.8 million barrels in the week
to March 23, according to the most recent EIA inventory report
released last Wednesday.
U.S. OIL INVENTORIES
U.S. crude inventories rose 7.8 million barrels in the week
to March 30, the industry group American Petroleum Institute
said in a report released late on Tuesday, a much bigger
increase than expected.
Gasoline stocks fell 4.5 million barrels, down 1.337 million
in PADD 1, and distillate stocks fell 1.4 million barrels, the
Ahead of weekly reports on U.S. oil inventories, crude oil
stocks were expected to have risen last week by 2.2 million
barrels, a Reuters poll of analysts showed.
Gasoline stockpiles were expected to be down 1.4 million
barrels and distillate stocks were estimated to be down 400,000
barrels, the survey showed.
The U.S. government's report from the EIA is slated for
release on Wednesday at 10:30 a.m. EDT (1430 GMT).
NORTH SEA CARGO DELAYS
Tightening sanctions on Iran's crude oil exports and the
scramble by consuming nations to find alternative supplies were
not the only supply problem limiting oil's losses.
At least seven cargoes of North Sea Forties crude loading in
April have been delayed and three canceled, trading sources
said, following production problems including the shutdown of
Total's Elgin platform because of a gas leak.
BP Plc's Valhall platform in the Norwegian North Sea,
shut last week for unplanned maintenance, produces oil flowing
into the Ekofisk production stream. The Valhall shutdown has led
to delays to seven Ekofisk shipments, according to traders.
(Additional reporting by Claire Milhench in London and Francis
Kan in Singapore; Editing by David Gregorio, Dale Hudson and Jim