NEW YORK (DTN) -- New York Mercantile Exchange oil futures extended lower Tuesday morning ahead of the release of data that's expected to show another increase in domestic crude oil inventory for the week ended March 18.
Additionally, there is growing skepticism a plan by leading oil producers including Saudi Arabia and Russia to freeze their production at January levels will successfully rebalance the market.
"[There's] a lack of confidence OPEC will keep a lid on supply," said Tom Bentz, head of energy derivatives at ABN AMRO in New York.
The Organization of Petroleum Exporting Countries and non-OPEC producers have scheduled a meeting April 17 in Qatar to discuss the Saudi Arabia-Russian plan to freeze oil production at January rates.
Technically, the short-term trend remains down for crude futures and ULSD, while RBOB continues to consolidate near resistance. Initial support for West Texas Intermediate crude is pegged at $36.62 bbl, a price that marks the 33% retracement level of the previous uptrend from $26.05 through the high of $41.90.
At last look, NYMEX May West Texas Intermediate crude oil futures were down $1.27 at $38.12 bbl, near a two-week spot low at $38.00, while the May Brent futures contract traded on the IntercontinentalExchange was down $1.19 at $39.08 bbl, off a two-week low of $38.98 bbl.
In products trade, NYMEX April ULSD futures eased 2.81cts to $1.1520 gallon, off a three-week low of $1.1500, while April RBOB futures slumped 4.20cts to $1.4260 gallon, near a $1.4220 gallon two-day low.
The ICE May Brent contract and NYMEX April products contracts will expire on Thursday.
On Wall Street, the stock market fell and the dollar was flat despite new Case-Shiller data that showed a 5.7% increase in U.S. home prices in January versus a year earlier. The market is looking ahead to March non-farm payroll and manufacturing data due on Friday.
Also, traders await a speech by U.S. Federal Reserve Chair Janet Yellen on the economy and monetary policy at the Economic Club in New York later today. A few Fed officials have suggested the federal funds rate should be raised soon, and investors want to hear Yellen's position. Her comments could impact the dollar and potentially oil prices.
For oil traders, the issue of supply remains the key. A survey by Schneider Electric showed expectations for a 1.7 million bbl build in U.S. crude oil stockpiles, a 2.5 million bbl decline in gasoline stocks and a 500,000 bbl drawdown in distillate inventories.
The American Petroleum Institute is scheduled to release its weekly data at 4:30 p.m. ET and the Energy Information Administration at 10:30 a.m. ET Wednesday.
George Orwel can be reached at email@example.com
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