Oil futures: Brent stalls at $80/b, eases from highs after EIA data
Quantum Commodity Intelligence – Crude oil futures Wednesday were higher as markets extended the previous session's gains, although off from the day's highs as prices eased after slightly disappointing US inventory data.
Sep23 ICE Brent futures were trading at $79.85/b (1655 GMT), compared to the day's range of $79.37-$80.93/b and Tuesday's settle of $79.63/b.
At the same time Sep23 NYMEX WTI was trading $75.81/b, versus Tuesday's close of $75.66/b, while the Aug23 was at $75.87/b heading into the expiry.
Oil prices swung back to the upside amid a growing belief Moscow will abide by its pledge to curb exports by an additional 500,000 bpd next month, while a further extension of Saudi's voluntary output cut of 1 million bpd cannot be ruled out.
"Crude oil gained amid signs of further tightening across the market. Russia appears to be making good on its promise to reduce supply," said ANZ commodity strategist Daniel Hynes.
ANZ noted Moscow has already started to cut seaborne exports this month, although this could be Russian oil losing its appeal to price-sensitive buyers as discounts narrow and Urals seen passing the $60/b price cap on a FOB basis.
Oil markets were also given a lift as expectations of further stimulus from China increased, as the country's top economic official said it would roll out policies to "restore and expand" consumption.
Inventories
Markets also consolidated after data from the American Petroleum Institute late Tuesday revealed a drop in US commercial crude inventories of 800,000 barrels last week, albeit below expectations. But gasoline stocks fell by 2.8 million barrels, while distillates posted a 3-million-barrel draw.
But official EIA inventory data showing a narrow 700,000-barrel fall in crude stocks was enough to take the gloss off the price rebound, with a higher draw built into prices.
Gasoline data was also keenly watched after implied demand in the US – the world's largest gasoline market – hit an 18-month high in the run-up to the 4 July weekend.
US demand typically peaks in July-August holiday season, while inventories remain tight by historical standards – around 6% below their five-year average in the first week of July.
The combined consumption of gasoline, jet fuel, and diesel/gasoil accounts for over 70% of the total demand for oil products in the US, with gasoline alone contributing approximately 43%, according to consultants Rystad Energy.
"This year, we anticipate an overall growth in oil demand in the US, with a projected increase of 216,000 bpd," said Rystad, adding gasoline and jet fuel are expected to undergo the most significant year-on-year changes.
