Singapore — Crude oil futures were stable to higher during mid-morning trade in Asia Wednesday after the American Petroleum Institute reported a larger-than-expected draw in US crude inventories and geopolitical tensions remained in focus ahead of the re-imposition of US sanctions on Iran.
At 10:41 am Singapore time (0241 GMT), November ICE Brent crude futures were up 55 cents/b (0.70%) from Tuesday's settle at $79.61/b, while the NYMEX October light sweet crude contract was 79 cents/b (1.14%) higher at $70.04/b.
"The American Petroleum Institute figures for the week ended September 7 showed a much larger-than-expected 8.6 million barrels and WTI reacted positively," OANDA's head of trading Stephen Innes said.
The draw exceeded analysts' expectations of a 2.7 million-barrel draw in a survey by S&P Global Platts Tuesday.
"Even Cushing, which everyone was fretting about early in the week due to pipeline bottlenecks, showed a decrease of 1.17 million barrels," Innes added.
"The oil market is directionally bullish now," Mitsubishi Corp.'s senior adviser Tony Nunan said. "The biggest driver of crude [Wednesday] is the big draw on crude, especially towards the end of summer season when demand starts to fall," he added.
"The underlying strength also lies in the US sanctions on Iran. In addition, the market is factoring in possible pipeline disruptions as a result of the hurricane," Nunan added.
Market participants have increased hedging activity ahead of the re-imposition of US sanctions on Iranian oil exports in November, when many expect prices to climb above $80/b, the US Energy Information Administration said Tuesday in a report.
"Apparent hedging activity in the crude oil options market suggests several market participants purchased financial protection in anticipation of an increase in crude oil prices ahead of the November implementation of Iranian sanctions," the EIA said in its latest Short-Term Energy Outlook.
It reported Iranian crude production fell 200,000 b/d from July to 3.52 million b/d in August as the re-imposition approached. Iran's production has dropped 310,000 b/d since April, EIA added.
As of 0241 GMT, the US Dollar Index was up 0.06% higher at 95.135.
