Oil declines on oversupply worries

By Chavon Sutton, staff reporter


NEW YORK (CNNMoney.com) -- Oil prices fell Tuesday, declining for the fifth straight session as worries about oversupply weighed on the market.

What prices are doing: Crude oil for May delivery fell 29 cents to settle at $84.05 a barrel.

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For more commodities prices, click chart.

Prices were down as much as 2% during Tuesday trading and have dropped nearly 4% over the last five days amid mounting concerns about sluggish demand and rising supply.

What's moving the market: The International Energy Agency, an influential energy advisor to 28 countries including the United States, said in its monthly report that crude prices above $80 a barrel could stunt the economic recovery.

The IEA also said it expects demand growth of 1.7 million barrels per day this year, compared with a decline of 1.3 million barrels per day last year.

Traders will be keeping a close eye on the U.S. government's weekly crude inventory report, due out early Wednesday. Analysts expect crude inventories to rise by 1.6 million barrels, according to research firm Platts. That would mark the 11th straight week of supply increases.

What analysts are saying: Stephen Schork, a commodities analyst for The Schork Group, said he expects the "tug of war of demand speculation against supply fundamentals to continue in the short term," as traders await stronger signs of a rebound in demand.

Big oil companies like Exxon Mobil (XOM, Fortune 500), Chevron (CVX, Fortune 500) and ConocoPhillips (CVP) may help shed some light on where demand is headed when they release their quarterly results at the end of the month, said Schork.

Prices had rallied during the early part of April but without any fundamental drivers, analysts think the run-up may have gotten ahead of itself and is due for a pullback.

Looking ahead: A spate of economic reports are due out this week. Of particular interest to oil traders will be the jobless claims reports, retail sales and consumer price index.

Signs that the economy is continuing its recovery could help lift demand and give oil prices a boost. To top of page

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