By Kishori Krishnan Exclusive To Crude Investing News

Crude oil fell on Tuesday, snapping four days of gains, on concern a U.S. government report will show stockpiles climbed from the highest level since September 1990. Crude oil for June delivery declined as much as 77 cents, or 1.4 per cent, to $53.70 a barrel in electronic trading on the New York Mercantile Exchange. Oil is up 21 per cent this year.

After nose-diving from a peak of $147 to $ 33 per barrel, crude oil is again displaying a good show of strength. Crude oil may be headed for $71.55 a barrel after breaking through $56.10 a barrel, according to Barclays Capital.

Crude-oil stockpiles increased 2.55 million barrels in the week ended May 1 from 374.7 million the previous week, according to the median of six estimates by analysts before an Energy Department report tomorrow.

“For as long as demand remains weak, stock levels high and economic data fails to show solid evidence of recovery, oil is likely to be trapped in a $50 to $55 range,” said Christopher Bellew, senior broker at Bache Commodities Ltd. in London, to Bloomberg.

The likely target of this current up-move is initially the recent swing high-around $54.65. Once that is breached, crude could test $58-60, which is 23.6 per cent retracement of the entire fall from its all-time high. On the downside, $48 will act as immediate resistance,” equity investing firm Sharekhan added in report.

On Monday, oil rose $1.27 to $54.47, the highest settlement since November 24 after spending on U.S. construction unexpectedly rose in March for the first time in six months. Increases in commercial and government projects overshadowed a drop in home building.

U.S. crude oil futures ended higher for the fourth session in a row on Monday, as optimism about an economic recovery that lifted Wall Street also supported oil markets. The dollar fell against the euro, encouraging investment.

“The economic optimism that has supported the stock market has also pulled up crude futures. There’s nothing on the oil demand side or fundamentals that could have triggered this development,” said Amanda Kurzendoerfer, commodities analyst at Summit Energy in Louisville, Kentucky.

Pending sales of U.S. existing homes have jumped along with spending on construction projects, signaling energy demand may improve with the economy. The National Association of Realtors’ index has reported a jump in signed purchase agreements for a second month.

“People are pinning their thoughts on things getting better as we go through the year,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The market seems to be looking forward rather than at what’s immediately overhanging.”

“We’re sitting on a large reservoir of oil, and we’re facing another build in inventories this week, because we’re not cracking any oil,” said James Cordier, portfolio manager at OptionSellers.com in Tampa, Florida. “Cracking” refers to the process by which refiners turn oil into gasoline, jet fuel, heating oil and other products.

Company news

Essar Oil Ltd, which commissioned its 10.5 million tonne per annum petroleum refinery last May, has successfully expanded the capacity to 14  mtpa. The scrip has more than doubled over the last one month to Rs 152. The company had shutdown its Gujarat based refinery from April 18 for the expansion work, which was commissioned on May 3.

Oil and gas exploration company EOG Resources Inc. said on Monday that its first-quarter profit fell 34 per cent. The company said it earned $158.7 million, or 63 cents per share, during the quarter that ended March 31, down from $240.5 million, or 96 cents per share, during the year-earlier period.

Revenue rose 2 per cent to $1.16 billion, from $1.13 billion a year earlier. The company said it had mark-to-market hedging gains of $226.1 million after taxes, or 90 cents per share. If those gains were counted in the quarter in which the hedge settles, EOG said it would have had a first-quarter profit of 53 cents per share.

Chairman and CEO Mark G. Papa said the company is optimistic that crude prices will strengthen later in 2009 and that natural gas prices will recover in 2010.

PT Medco Energi Internasional, Indonesia’s biggest publicly traded oil company, said it may sell part of a stake in a Libyan oil block to raise funds for projects in Indonesia. The shares surged to a seven-month high. Medco may alternatively use its 50 per cent stake as collateral to obtain a loan, Budi Basuki, president of the company’s production unit, told reporters in Jakarta today. Co- explorer Verenex Energy Co. of Canada holds the other 50 per cent.

Alberta’s exports are expected to drop 35 per cent in 2009 before rising by 13 per cent in 2010, according to a provincial export outlook by Export Development Canada (EDC). “All five of Alberta’s major export categories are expected to drop, and energy will lead the way with lower prices for crude and natural gas,” said Peter Hall, Chief Economist of EDC.

“Energy prices will regain some lost ground next year, lifting the province’s total exports by 13 per cent. While this is expected to be the second best performance among the provinces, it still leaves the province’s total exports overall almost 26 per cent below the boom times of 2008,” he added.

Alberta’s export picture is dominated by the energy sector, which accounts for 74 per cent of the province’s overall exports. EDC expects crude and petroleum product exports to plunge 40 per cent in 2009, as the price of crude falls from an average USD100/brl in 2008 to USD47/brl in 2009.