Crude dives as market braces for bearish inventory report

Crude futures dropped on Tuesday as investors ditched the commodity on concerns Wednesday's weekly U.S. inventory report will disappoint.

On the New York Mercantile Exchange, West Texas Intermediate crude oil for delivery in June traded at $101.70 a barrel during U.S. trading, down 1.88%. New York-traded oil futures hit a session low of $101.51 a barrel and a high of $103.66 a barrel.

The June contract settled up 0.27% at $103.65 a barrel on Monday.

Nymex oil futures were likely to find support at $99.95 a barrel, the low from April 7, and resistance at $104.97 a barrel, Wednesday's high.

Investors sold and jumped to the sidelines ahead of Wednesday’s weekly Energy Information Administration report on U.S. crude stockpiles.

Analysts were expecting the report to show an increase in oil inventories last week, while gasoline inventories were expected to have declined.

Last week the EIA reported that crude oil inventories rose by a larger than forecast 10.01 million barrels in the week ended April 11. It was the largest one-week increase in U.S. oil stockpiles in 13 years.

Industry group the American Petroleum Institute was scheduled to release its weekly supply data later Tuesday.

Expectations for gains in U.S. stockpiles overshadowed ongoing concerns over heightened tension in eastern Ukraine.

A diplomatic accord aimed at easing the crisis in the region showed signs of faltering on Monday, with the U.S. and Russia both blaming each other for not implementing the terms of the agreement reached in Geneva last Thursday.

The U.S. is ready to slap fresh economic sanctions against Russia if it fails to take concrete steps to implement the terms of the Geneva accord, fanning fears over possible supply disruptions.

Russia is the world’s second largest oil exporter after Saudi Arabia.

Elsewhere, on the ICE Futures Exchange in London, Brent oil futures for June delivery were down 0.86%, trading at US$109.01 a barrel, while the spread between the Brent and U.S. crude contracts stood at US$7.31 a barrel.