WTI oil futures fall 2% ahead of U.S. API supply report

Investing.com - West Texas Intermediate oil futures fell sharply on Tuesday, as traders looked ahead to weekly data on U.S. stockpiles of crude and refined products later in the day.

On the New York Mercantile Exchange, crude oil for July delivery dropped $1.49, or 2.47%, to trade at $58.75 a barrel during U.S. morning hours after hitting an intraday low of $58.67, the weakest level since May 4.

A day earlier, Nymex oil shed 30 cents, or 0.5%, to end at $60.24. New York-traded oil futures hit a five-month peak of $63.61 on May 6.

The American Petroleum Institute will release its inventories report later in the day, while Wednesday’s government report could show crude stockpiles fell by 2.1 million barrels in the week ended May 15.

Elsewhere, on the ICE Futures Exchange in London, Brent oil for July delivery fell to a daily low of $64.76, a level not seen since April 28, before trading at $64.85, down $1.42, or 2.14%.

On Monday, Brent prices lost 54 cents, or 0.81%, to close at $66.27. London-traded Brent futures rallied to a five-month high of $70.36 on May 6.

Indications that oil output in the Middle East was increasing, despite ongoing wars in Iraq, Syria and Yemen, weighed.

Saudi Arabia's Oil Minister Ali al-Naimi said the kingdom produced 10.3 million barrel per day of crude in March, above its previous record of 10.2 million in August 2013. The kingdom exported 7.898 million barrels per day of crude in March, the most in nearly a decade and up from 7.350 million in February.

The spread between the Brent and the WTI crude contracts stood at $6.10 a barrel early on Tuesday, compared to $6.03 by close of trade on Monday.

Meanwhile, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 1.3% to hit 95.45.

Dollar-priced commodities become more expensive to investors holding other currencies when the greenback gains.

The U.S. Commerce Department said earlier that the number of building permits issued in April increased by 10.1% to 1.143 million units. Analysts expected building permits to rise by 2.2% to 1.060 million units in March.

The report also showed that U.S. housing starts soared by 20.2% in April to hit 1.135 million units from March’s total of 944,000 units, easily surpassing expectations for an increase of 9.9% to 1.019 million.

The upbeat data added to signs of a recovery in the housing market and bolstered the outlook for the broader economic recovery.

Market players now looked ahead to Wednesday’s minutes of the Federal Reserve’s April meeting, as well as U.S. inflation data on Friday, for fresh indications on the strength of the economy and the timing of a U.S. rate increase.