Crude oil futures were higher during mid-morning Asian trade June 9 on the back of a rebound in demand from China and the US, with tighter gasoline inventories in the US adding to the bullish sentiment.
The ICE August Brent futures contract was up 12 cents/b (0.10%) from the previous close at $123.70/b at 10:26 am Singapore time (0226 GMT) June 9. The NYMEX July light sweet crude contract was stable at $122.11/b.
“Following a 5 million [barrel] drop [in US commercial crude stocks] last week, there is a [supply] squeeze for refined products like petroleum and diesel,” OANDA senior market analyst Jeffrey Halley told S&P Global Commodity Insights, explaining the overnight rally in the oil complex.
US gasoline inventories had extended their decline in the week ended June 3, falling 810,000 barrels to 218.18 million barrels, leaving stocks over 10% behind the five-year average for this time of the year, data from the US Energy Information Administration showed June 8.
Weekly product supplied for gasoline, a proxy for demand, rose 3.66% on the week to 20.227 million barrels over the same period, EIA data also showed.
This was in line with market expectations as the country is in the midst of its peak driving season, according to analysts.
The bullish picture in Asia was supported by easing COVID-19-related restrictions in Asia and the subsequent market expectations of recovering demand.
“Another thing that tipped Brent crude through $120/b is China reopening with restrictions being eased in Shanghai and Beijing. The demand for domestic goods and services should rebound,” Halley added.
This had followed muted demand due to extended lockdowns in the country for the past two months, and analysts were bullish on the pick up in Chinese economic activity.
“Retail sales of passenger vehicles rose 30% from April to 1.35 million units in May, according to China’s Passenger Car Association,” Brian Martin and Daniel Hynes from ANZ Research said in a June 9 note.
The August Dubai swap was pegged at $112.55/b at 10 am Singapore time (0200 GMT) June 9, up $3.12/b (2.85%) from the Asian close June 8.
The July-August Dubai swap intermonth spread was pegged at $3.03/b at 10 am, up 21 cents/b over the same period, and the August-September intermonth spread was pegged at $2.32/b, up 13 cents/b. The August Brent/Dubai EFS was pegged at $11.47/b, up 27 cents/b.
Source: Spglobal.com
