Oil futures back below $105 in electronic trading

SAN FRANCISCO (MarketWatch) � Crude-oil futures fell Tuesday, adding to losses after minutes from the latest rate-setting U.S. Federal Reserve meeting showed officials unlikely to embark on another bond-purchasing program, curbing investment demand for commodities.

Crude for May delivery �dropped $1.22, or 1.2%, to end at $104.01 a barrel on the New York Mercantile Exchange.

Oil had spent the day in the red as traders anticipated another increase in weekly crude inventories and after a 2.2% jump in the previous session.

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Royal Bank of Canada was accused by the CFTC of making hundreds of millions of dollars in illegal futures trades with itself to reap tax benefit. (Photo: Reuters/Mark Blinch)

The EIA is scheduled to report its weekly data on inventories early Wednesday, with the American Petroleum Institute trade group slated to report its own data later Tuesday.

Analysts polled by Platts forecast an increase of 1.9 million barrels in crude for the week ended March 30. Gasoline stockpiles are seen down 1.6 million barrels on the week, while supplies of distillates are expected to decline 600,000 barrels.

That would follow a surge of 7.1 million barrels for crude in the previous week.

Increases at this time of the year are expected as refineries are in their maintenance period before summer driving season, said Tom Bentz, director at BNP Paribas in New York.

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Traders want to see the inventories numbers �before they make their next move,� he said. Oil has been rangebound for the better part of six weeks, trading between $104 and $108 a barrel, he added.

While a reported halt of Iraqi oil exports from the Kurdistan region and an improvement in the Institute for Supply Management�s manufacturing index for March helped lift crude prices on Monday, weak European manufacturing data kept alive concerns about the possible impact of high oil prices on the region�s economy.

Providing some support for prices, the dollar was weaker for much of the session, though it rose after the Fed minutes. The ICE dollar index DXY , which compares the U.S. unit with a basket of six currencies, rose to 79.387, down from 78.973 late Monday.

U.S. equities opened narrowly lower before data on factory activity, and spent the day in the red.

The Commerce Department on Tuesday reported that factory orders rose 1.3% in February. Economists polled by MarketWatch had expected an increase of 1.5%. January factory orders were revised down to a 1.1% decline, from a previous estimate of a decrease of 1%.

Among other energy futures Tuesday, gasoline for May delivery rose 1 cent, or 0.4%, to $3.40 a gallon, holding steady for most of the session.

May heating oil �declined 2 cents, or 0.7%, to $3.23 a gallon. Natural gas for the same month �turned higher, up 3 cents, or 1.6%, to $2.19 per million British thermal units.