Oil Drifts as Traders Weigh Latest Price Rally

Oil prices wavered Monday, then settled lower, amid uncertainty about the strength of the recent price rally.

Light, sweet crude for June delivery settled down 16 cents, or 0.3%, at $56.99 a barrel on the New York Mercantile. Brent crude, the global benchmark, fell 45 cents, or 0.7%, to $64.83 a barrel on the ICE Futures Europe exchange.

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Prices have rallied more than 30% since hitting a six-year low in mid-March, but analysts say the market remains oversupplied and prices could be due for a pullback.

"The energy markets have gotten ahead of the actual data," said Michael Corcelli, chief investment officer at Alexander Alternative Capital LLC. For prices to rally, he said, "we need firmer demand and some type of tangible supply response."

Traders have been looking at drilling and production data for signs that U.S. oil output is peaking and that U.S. crude inventories, which are at the highest level in more than 80 years, are growing less slowly or even shrinking.

Data provider Genscape Inc. told clients Monday that crude-oil supplies in Cushing, Okla., a key storage hub, fell by 195,000 barrels in the week ended Friday, according to two market participants.

Cushing stockpiles are at a record high and near maximum capacity at the hub. If the drop in supplies is confirmed by the U.S. Energy Information Administration on Wednesday, it would mark the first decline in Cushing stocks since November.

A decline in Cushing stocks at this time of year is expected as refineries on the Gulf Coast complete seasonal maintenance and buy more crude. But pipeline outages in West Texas could divert more crude to Cushing in May, said London research firm Energy Aspects, which expects supplies at the hub to rise by 500,000 barrels next month.

Gasoline futures settled up 0.11 cent, or 0.1%, at $2.009 a gallon, the highest settlement since Nov. 26, 2014.

Diesel futures fell 0.69 cent, or 0.4%, to $1.9214 a gallon

(By Nicole Friedman)