Oil prices retreat in Asia on hopes of rising U.S. fuel stocks

Oil prices eased in Asian trading Tuesday on expectations that U.S. fuel inventory data would again show a rise in crude and gasoline stocks.

Light, sweet crude for August delivery fell 4 cents to US$69.14 a barrel on the New York Mercantile Exchange midmorning in Singapore. The contract rose 4 cents to settle at US$69.18 a barrel on the New York Mercantile Exchange Monday.

Brent crude for August delivery fell 3 cents to US$71.19 a barrel on the ICE Futures exchange in London.

U.S. stockpiles of gasoline are expected to have risen 1.1 million barrels in the week ended June 22, according to 10 analysts surveyed by Dow Jones Newswires ahead of the U.S. Department of Energy's petroleum supply report on Wednesday.

The analysts also predicted the report to show refinery utilization increased by 0.8 percentage points last week to 88.4 percent of capacity.

Despite the expected increases in supplies and refinery rates, there are lingering concerns the refining industry will not be able to produce enough gasoline to meet U.S. summer driving demand, which peaks between the July 4 and Labor Day holidays.

"0.8 and 1.1 are both dismal numbers," says Phil Flynn an analyst at Alaron Trading Corp., in Chicago. "(Refiners) have a long way to go to make up for all the supplies they lost earlier in the year."

Analysts have said refineries should be running at 94-95 percent of capacity at this time of year.

Crude stocks are expected to have risen by 1 million barrels last week. Distillate stocks, which include heating oil and diesel fuel, are forecast to have increased by 200,000 barrels last week, the Dow Jones Newswires survey showed.

In other Nymex trading, heating oil futures for July were unchanged at US$2.0424 a gallon (3.8 liters), and natural gas prices were flat at US$6.940 per 1,000 cubic feet.