Crude oil futures were higher during mid-morning trade in Asia Thursday, following a smaller-than-expected build in US crude inventory and coupled with OPEC's latest report on its production levels, as market participants looked forward to developments in trade talks between the US and China.
At 10:45 am Singapore time (0245 GMT), ICE February Brent crude futures moved 25 cents/b (0.39%) higher from Wednesday's settle to $63.97/b, while the front-month NYMEX January light sweet crude contract moved 12 cents/b (0.2%) higher to $58.88/b.
According to data released by the US Energy Information Administration on Wednesday, US crude inventory for the week ended December 6 climbed 822,000 barrels, while preliminary reports expected US crude stocks for the same period to have increased by 1.4 million barrels.
"It [US crude stocks] was a smaller build than the plus 1.4 million barrels reported by the API [American Petroleum Institute]. An increase in imports was the main driver of the rise, although refinery input also declined," Stephen Innes, chief Asia market strategist at AxiTrader, said in a note Thursday.
The EIA data was not entirely bearish for crude futures, considering that inventories fell 3.39 million barrels to 40.4 million barrels at Cushing, Oklahoma, the delivery point for NYMEX crude.
Elsewhere, OPEC released its monthly oil market report on Wednesday in which it reaffirmed its "continuing commitment to oil market stability."
OPEC would need near-100% compliance with its cuts to ensure that the market is not oversupplied.
The second quarter of 2020 looks even more challenging for OPEC, with demand for its crude forecast to drop to 28.88 million b/d.
"It remains to be seen if the level of 29 million b/d can be eventually hit, given that Saudi Arabia largely carried the bloc in ensuring OPEC produced below its allocated quota," OCBC Bank analysts said in a note Thursday.
"With Saudi's hands already tied by its additional voluntary cuts of 400,000 b/d, the hurdle to meet the lowered production level might prove even higher in 2020," they added.
Meanwhile, investors are following developments around trade negotiations between the US and China with the December 15 deadline for fresh tariffs on Chinese imports fast approaching.
"In the near-term, US-China trade remains the primary catalyst [for crude prices]," Innes said.
As of 0245 GMT, the US Dollar Index was down 0.1% at 97.055.
