ENB Publishers Note: CL briefly passes $53 before diving before settled below after European open drives price action down. Bull still fully in control.
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Singapore — 0236 GMT: Crude oil futures were rangebound during the mid-morning trade in Asia Jan. 12 as analyst expected profit-taking activities to put some pressure on a recent price rally, with any significant price falls being tempered out by an OPEC+ backstop and expectations of further stimulus measures.
At 10:36 am Singapore time (0236 GMT), the ICE Brent March contract was down 3 cents/b (0.05%) from the Jan. 11 settle to $55.63/b, while the February NYMEX light sweet crude contract was flat at $52.25/b. The Brent market had fallen 0.59% to settle at $55.66/b on Jan. 11, while the light sweet crude marker had stayed rangebound, rising 0.02%.
Market analysts said that a dip in prices could be expected going forward, as the meteoric rise in prices seen in the week ended Jan. 8 may prompt some profit-taking activities, especially since countries around the world continue to grapple with rising COVID-19 caseloads and tightened mobility restrictions.
“The vaccine news has turbo-charged the rally and oil has had an extra kick from [Saudi Arabia’s production cut]. With so much good news priced in and near-term risks piling up, it wouldn’t be surprising to see some profit taking kick in,” said Craig Erlam, Senior Market Analyst, OANDA, in a Jan. 12 note.
Erlam further added that the fall in oil prices is likely to be nominal, as the market could count on the OPEC+ coalition to adjust their production to match the demand-side situation.
The market was also optimistic ahead of Jan. 14, when US President-elect Joe Biden is expected to unveil his proposals for fiscal relief. Biden has already promised “trillions of dollars” of stimulus, which could benefit oil and energy demand by invigorating the faltering US economic recovery.
Meanwhile, analysts surveyed by S&P Global Platts were bullish in their forecast for the US commercial crude drawdown in the week ended Jan. 8, as they expected inventories to fall by 3.8 million barrels to around 481.7 million barrels, the lowest level since late-March, 2020.
Comprehensive data on weekly inventory reports by the American Petroleum Institute and the US Energy Information Administration will be released on Jan. 12 and Jan. 13, respectively.
