The price of oil hovered around $97 a barrel on Wednesday ahead of the release of U.S. housing starts for January.
By early afternoon in Europe, benchmark crude for April delivery was down 19 cents to $96.91 a barrel in electronic trading on the New York Mercantile Exchange. The March contract, which expires Wednesday, rose 80 cents to finish at $96.66 per barrel on the Nymex on Tuesday.
Later in the day, the U.S. Commerce Department will release housing starts for the month of January, a key gauge of the real estate industry and economy. In December, builders broke ground on houses and apartments at a seasonally adjusted annual rate of 954,000. That was 12.1 percent higher than November's annual rate.
A report on Tuesday showed that confidence among homebuilders slipped, as builders remain concerned about the sturdiness of the U.S. economy and the risk of rising unemployment.
The Nymex contract's West Texas Intermediate was seen supported by news of increased capacity in the Seaway pipeline which carries crude from Cushing, Okla., the delivery location of WTI, to refineries on the Gulf Coast, noted analysts at Commerzbank in Frankfurt.
Pipeline operator Enterprise Products Partners said that Seaway's capacity will average 295,000 barrels a day from February to May, compared with 180,000 barrels a day in January.
In Germany, a survey of investor confidence was upbeat on Tuesday, but traders are concerned about the possible outcome of a weekend parliamentary election in Italy. Traders are worried that a change in leadership could derail efforts to end Europe's financial crisis.
Analysts at Credit Agricole CIB in Hong Kong wrote in a market commentary that the polls "may yet dampen confidence so we would caution about becoming too excited."
Brent crude, used to price many international varieties of oil, was down 32 cents to $117.20 per barrel on the ICE Futures exchange in London.
In other energy futures trading on the Nymex:
— Heating oil rose 0.17 cent to $3.1834 per gallon.
— Wholesale gasoline fell 3.44 cents at $3.2808 per gallon.
— Natural gas added 2.8 cents to $3.30 per 1,000 cubic feet.
Pamela Sampson in Bangkok contributed to this report.
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