* U.S. crude falls on Keystone news
* API report shows crude stocks up 1.1 million barrels
* U.S. supply helping to ease global oil market, IEA says
* German investor morale improving more slowly than expected
(Adds API data)
By Anna Louie Sussman
NEW YORK, May 14 Brent crude oil prices fell on
Tuesday after a global energy watchdog described world supplies
as "comfortable" and analysts forecast a continued build in the
U.S. crude inventory, while gasoline rose 1 percent on expected
inventory draws ahead of the summer driving season.
U.S. crude prices tumbled further late in the trading
session, following news that an outage on TransCanada's
590,000-barrel-per-day Keystone oil pipeline would be resolved
Earlier in the session, strong U.S. equity markets helped
support U.S. crude.
U.S. crude's slide allowed Brent to regain some of its
premium to the U.S. crude oil after it had earlier narrowed to
the lowest level since 2011.
Brent crude oil fell 22 cents to settle at $102.60
per barrel, after trading largely within a $1 range. U.S. crude
settled down 96 cents at $94.21 per barrel.
Prices for both crudes were little changed in
U.S. gasoline was up most of the day, ahead of the
U.S. Memorial Day holiday, considered the start of the U.S.
summer driving season.
Trading volumes were light, with U.S. crude volumes 23
percent below the 30-day moving average and Brent volumes 19
percent below the 30-day moving average.
The International Energy Agency (IEA) said rapidly
increasing non-OPEC oil output would meet most of the world's
extra oil demand over the next few years and it also forecast a
production increase from OPEC of 200,000 barrels per day,
largely from Iraq.
Tim Evans, energy specialist at Citi Futures Perspective in
New York, wrote in a research note that increased supply "will
weigh on prices absent more end-use consumption."
The closely followed German ZEW think tank said on Tuesday
its monthly poll of economic sentiment rose to 36.4 points from
36.3 in April, indicating a smaller-than-expected improvement
due to the weakness of the euro zone economy.
"The oil market is just grappling with the underlying
economy," said John Kilduff, a partner with Again Capital in New
North Sea Brent held a near $20 premium for much of 2012
over WTI, but the spread has narrowed steadily to less than $8.
It has traded largely below $10 for the last 12 sessions,
reaching a 2013 low of $7.20 on Tuesday before settling at
The completion of pipeline projects such as the Permian
Express, Longhorn and West Texas Gulf Expansion is expected to
help drain some stocks out of the U.S. Midwest and to
A stronger dollar also weighed on oil prices. A firm dollar
makes commodities priced in the greenback more expensive for
holders of other currencies.
The American Petroleum Institute on Tuesday released its
weekly inventory report showing that U.S. crude stocks rose 1.1
million barrels through the week ended May 10, more than the
300,000 rise predicted by a Reuters poll of analysts. Gasoline
stocks fell by 480,000 barrels, less than the 800,000 decline
predicted by analysts.
On Wednesday at 10:30 a.m. EDT (1430 GMT), the U.S.
Department of Energy's Energy Information Administration will
release its more closely-watched inventory report.
(Additional reporting by Christopher Johnson in London, Manash
Goswami in Singapore; Editing by David Gregorio and Bob