Singapore — 0329 GMT: Crude oil futures rose during the mid-morning trade in Asia March 9, as expectations of higher oil demand amid an improved economic climate encouraged buying activity from investors, even as the market recovered from the chaos brought about by an attempted attack on a Saudi oil shipping port.
At 11:29 am Singapore time (0329 GMT), the ICE Brent May contract was up by 51 cents/b (0.75%) from the March 8 settle to $68.75/b, while the April NYMEX light sweet crude contract was up by 41 cents/b (0.63%) to $65.46/b.
Earlier on March 8, news of an attempted March 7 drone attack on a petroleum storage tank at the heavily protected Ras Tanura port had sent the Brent and NYMEX light sweet crude markers surging, with the front-month Brent contract crossing $71/b briefly. Prices however came right back down after reports emerged that oil supply had not been affected.
This morning, after the volatility seen on March 8, prices increased, as the market fell back onto the promise of an improved supply-demand equation.
The demand prospect for oil has brightened considerably as COVID-19 infection numbers have fallen in major economies, and as the global economic climate continues to improve. A $1.9 trillion US stimulus package, which has been approved by the US Senate and is now pending final approval by the US House of Representatives, promises to further expedite the demand recovery for oil.
Meanwhile, supply remains tight as the OPEC+, in its March 4 meeting, decided to largely roll over its March production quotas into April, and therefore keep 8 million b/d of OPEC+ production — or roughly 8% of pre-pandemic supply — off the market for at least another month.
“We have seen what looks like a classic V-shaped recovery in oil prices in the past few months, and that has been prompted by a broader improvement in the economic climate. Fundamentals for oil look good, and in the absence of noteworthy events, we are likely to see oil trending higher,” David Lennox, resource analyst at Fat Prophets, told S&P Global Platts on March. 9.
Meanwhile, in inventory data, commercial US crude stocks are expected to have increased 2.7 million barrels to around 487.3 million barrels in the week ended March 5, analysts surveyed by Platts said. The build would leave inventories 3.6% above the five-year average of US Energy Information Administration data, in from 4% the week prior.
The weekly inventory reports from the American Petroleum Institute and the EIA, are due to be released later March 9 and March 10 respectively.
