Singapore — 0251 GMT: Crude oil futures ticked lower during the mid-morning trade in Asia Jan. 21, as data released by the American Petroleum Institute showed an unexpected build in US crude inventories, although the market continued to hold up on the promise of more stimulus and better pandemic management during Joe Biden’s presidency.
At 10:51 am Singapore time (0251 GMT), the ICE Brent March contract was down 32 cents/b (0.57%) from the Jan. 20 settle to $55.76/b, while the March NYMEX light sweet crude contract was down 32 cents/b (0.60%) to $52.99/b. The Brent marker had risen 0.32% on Jan. 20 to settle at $56.08/b, with the NYMEX light sweet crude marker also rising 0.62% to $53.31/b.
API data released Jan. 20 showed an unexpected 2.56 million-barrel build in US commercial crude inventories in the week ended Jan. 15. The build came contrary to predictions by analysts, who had told S&P Global Platts that they had expected crude oil stockpiles to move 2.5 million barrels lower in the same week.
The API data also indicated that fundamentals in the downstream product markets were unimproved, as US gasoline and distillate inventories rose by 1.13 million barrels and 816,000 barrels, respectively.
At 10:51 am, the NYMEX February RBOB contract was trading 0.70 cents/gal (0.45%) lower than the Jan. 20 settle at $1.5369/gal and NYMEX February ULSD contract was down by 1 cent/gal (0.62%) at $1.5904/gal.
The market will now be looking towards more comprehensive inventory data from the Energy Information Administration, which is expected to be released Jan. 22.
Meanwhile, against the backdrop of bearish API data, the fall in crude prices was tempered by expectations that Joe Biden, now inaugurated as US President, will place a greater emphasis in pushing through fiscal stimulus, and in tackling the unabated pandemic situation in the country.
“The API numbers were not great but the market still seems to be holding up as it is still looking at the bigger picture of more stimulus being injected into the US economy,” Warren Patterson, head of commodities strategy at ING, told Platts Jan. 21.
“President Biden also reiterated his desire to tackle the pandemic more aggressively, which could ultimately support crude oil consumption ahead of the vaccine distribution,” added ANZ analysts in a Jan. 21 note.
However, market analysts remained concerned about the progression of the pandemic in Asia, and especially in China. A growing number of Chinese cities are imposing mobility restrictions amid fresh outbreak of the virus, and authorities have called on citizens to refrain from any travel during the coming Chinese New Year holidays.
“Even though the oil market seems to be holding relatively well, there is still a lot of downside risk right now due to the escalation of the pandemic. The situation is worrying in China as well, with many cities, including Beijing, going into a partial lockdown,” said Patterson.
