0215 GMT: Crude oil futures were slightly higher in mid-morning trade in Asia on Aug. 12 as American Petroleum Institute data released late Aug. 11 showed a larger-than-expected decline in US commercial crude inventories.
At 10:15 am Singapore time (0215 GMT), the ICE Brent October crude futures was up 9 cents/b (0.20%) from the Aug. 11 settle at $44.59/b, while NYMEX September light sweet crude contract was up by 4 cents/b (0.10%) at $41.65/b.
"API data is showing a larger-than-expected draw of 4.4 million barrels in US crude inventories, which should prop crude futures up," Vandana Hari, Founder and CEO of oil consultancy firm, Vanda Insights told Platts on Aug. 12.
"The 2.95 million barrels of decline in distillates that the API has reported is probably an even bigger surprise and would be bullish if confirmed, even directionally, by EIA data later today," she added.
Market participants will look to the more definitive weekly US inventory report due for release by the Energy Information Administration later in the day for further cues. Notably, it will be the third consecutive week of drawdown in US commercial crude inventories if the official EIA data confirms the API industry report released on Aug. 11.
Meanwhile, even as the number of daily new COVID-19 infections worldwide and in the US edged down, the medium term outlook for oil continues to be clouded with uncertainties, especially as global supply is expected to increase.
"OPEC and other producers are raising output to match higher quotas under the supply agreement. In the US, better prices are encouraging some shale producers to restart previously curtailed wells. The EIA raised its estimate of US supply to 11.14mb/d in 2021, against its previous forecast of 11mb/d set in July," the ANZ analysts said in a note Aug. 12.
The US Energy Information Administration, in its monthly Short-Term Energy Outlook, released Aug. 11 said that the forecasts "remain subjected to heightened levels of uncertainty because mitigation and reopening efforts related to the COVID-19 continue to evolve".
Moreover, even though the average of Brent crude oil spot prices in July were up $3/b from the average in June at $43/b, EIA expects that Brent spot prices will continue to average $43/b during the second half of 2020 as "high inventory levels and surplus crude oil production capacity will limit upward price pressures in the coming months."
Meanwhile, EIA raised its outlook for global oil demand by 250,000 b/d from last month's forecast to 93.14 million b/d for 2020 and by 280,000 b/d to 100.16 million b/d for 2021.
Market participants will also look for further cues on the short-term outlook of the global crude complex from OPEC's and the International Energy Agency's monthly oil market report scheduled for release on Aug. 12 and 13 respectively.
