Oil inches lower but stays above $112 a barrel

SAN FRANCISCO (MarketWatch) — Crude-oil prices ended a light-volume, roller-coaster Tuesday with mild losses, as traders headed to the sidelines before a key Federal Reserve policy statement and as the day’s economic data came in mixed.

Crude for June delivery CLM11 -0.09%  retreated 7 cents, or 0.1%, to $112.21 a barrel on the New York Mercantile Exchange.

Prices wavered between small gains and losses for most of New York’s floor trading, after posting gains in electronic trading during Asian and European hours.

Volume was thin, however, before the Federal Open Market Committee meeting and an unprecedented press conference by Fed Chairman Ben Bernanke.

But “there’s enough concerns about oil supplies” to keep prices from sliding further, said Walter de Wet, an analyst with Standard Bank in London.

A weaker dollar and firmer prices for products following a power outage at some Texas refineries also provided support for crude. Gasoline futures settled at their best level in 33 months.

Oil had held on to earlier losses after the day’s two economic reports.

The S&P/Case-Shiller home-price index showed that prices for single-family homes in 20 major U.S. cities fell 1.1% in February and 3.3% year over year. Read more about home prices.

Consumer confidence rose to 65.4 in April, compared with an upwardly revised 63.8 in March, the Conference Board said. Consumers’ 12-month inflation expectations declined to 6.3% in April from 6.7% in March. Read about consumer confidence.

Gasoline for May delivery RBK11 +1.00% added 3 cents, or 1%, to settle at $3.36 a gallon. That was gasoline’s highest close since mid-July 2008 and marked a fourth day of gains for the contract, which expires later this week.

An overnight power outage in Texas City, Texas, disrupted refinery production, knocking out “about 800,000 [barrels per day] of U.S. refining capacity,” said Citi Futures Perspective analyst Tim Evans in a note to clients. Some refiners have reported that their operations are back on line, however.

Heating oil for May delivery HOK11 +0.71% , which also expires later this week, settled 3 cents higher at $3.21 a gallon.

May natural gas NGK11 -0.05%  retreated less than a penny to $4.39 per million British thermal units. The contract expired Tuesday. The June contract NGM11 +0.07%  ended at $4.44 per million Btus, also having declined 1 cent.

Traders are expected to remain cautious ahead of the FOMC’s interest-rate decision, policy statement and Bernanke’s press conference, slated for Wednesday. Read more about potential tough questions for the Fed chairman.

The dollar index DXY -0.50% , which compares the U.S. unit with a basket of six currencies, traded at 73.802, down from 73.992 in late North American trading Monday.

In Saudi Arabia, the world’s top oil exporter, Aramco’s Chief Executive Khalid al-Falih said his country was concerned about the impact of current oil prices on the world economy.

Saudi Arabia is considering production expansion in several oil fields to reach 9 million barrels a day, analysts at J.P. Morgan said in a note to clients.

“Indications that the Kingdom plans to pump 9 [million barrels a day] will be taken both ways — on the one hand, as an indication that Saudi Arabia plans to up output on a long-term basis ... but on the other as a sign that production may still fall short of the levels needed to fully offset the loss of Libyan oil. Saudi Arabia’s expansion plans will take several years to effect if they are eventually approved,” they said.

(Source: http://www.marketwatch.com/story/crude-oil-futures-trade-at-112-a-barrel-2011-04-26?siteid=rss&rss=1)