Oil Futures Spill; U.S. Supply Expected to Climb

NEW YORK--Oil futures tumbled Tuesday on concerns that U.S. crude-oil supplies could near or even exceed an all-time high, as domestic oil production keeps rising.

Light, sweet crude for May delivery settled down $2.24, or 2.2%, at $102.13 a barrel on the New York Mercantile Exchange, the lowest price since April 7. The May contract expired at settlement. The contract for June delivery settled down $1.90, or 1.8%, at $101.75 a barrel.

Brent crude on the ICE futures exchange fell 68 cents, or 0.6%, to $109.27 a barrel.

U.S. oil production is booming because of new technologies enabling energy producers to access supplies trapped in shale-oil fields. Yet refiners aren't running at full capacity, which is typical for this time of year as refineries shut down units for seasonal maintenance.

As of April 11, domestic oil supplies stood just 3.4 million barrels below the peak reached in May 2013.

The U.S. Energy Information Administration is set to release its storage data for the week ended April 18 on Wednesday.

Analysts are expecting the report to show that crude-oil supplies rose by 2.4 million barrels last week, according to a Wall Street Journal survey.

Traders are "focusing on U.S. inventories, which are going to build again pretty dramatically," said Phil Flynn, analyst at Price Futures Group in Chicago.

Ten analysts expect stockpiles to rise, while two see a decline.

"I'm expecting imports to be sharply lower this week," said Andy Lebow, vice president for energy at Jefferies Bache LLC. "As a result, I think there's going to be a draw in stock."

The American Petroleum Institute, an industry group, said late Tuesday that its own data for the same week shows that crude stocks rose by 519,000 barrels in the week, according to industry sources. The group also said that gasoline supplies fell by 3.4 million barrels and stocks of distillates, including heating oil and diesel fuel, increased by 570,000 barrels, according to the sources.

Money managers held a near-record bullish bet on Nymex crude futures valued at $34.4 billion last week, according to the CFTC.

Some of those investors likely closed out their bets on higher prices before the May contract expired Tuesday, further pressuring prices, Mr. Lebow said.

Gasoline stockpiles, which are at their lowest point for this time of year since 2011, are expected to fall 1.4 million barrels, according to analysts.

Front-month May reformulated gasoline blendstock, or RBOB, settled up 0.83 cent, or 0.3%, at $3.0952 a gallon, its highest settlement price since July 19.

Meanwhile, Brent oil, the international benchmark, fell as concerns eased that tensions between Russia and Ukraine could lead to Western sanctions on Russian oil exports.

Brent floor trading was closed Friday and Monday. Prices rose Thursday on worries that the Ukraine crisis would worsen over the holiday weekend, Mr. Flynn said. Now back from holiday, traders closed out those bets today, he said.

"We expect the Ukraine factor to gradually dissipate as it becomes increasingly clear that any additional sanctions will have negligible impact on Russia's ability to produce or export crude," said energy-advisory firm Ritterbusch & Associates in a note.

May diesel settled down 0.91 cent, or 0.3%, at $3.0026 a gallon.