0230 GMT: Crude oil futures were mixed in midmorning trade in Asia on Aug. 25 as WTI gave up more of its previously priced-in gains on a weaker-than-expected Tropical Storm Marco over the US Gulf Coast, even as rising supply issues from two separate tropical storms supported the global crude complex.
At 10:30 am Singapore time (0230 GMT), the ICE October Brent crude futures was up 13 cents/b (0.29%) from the Aug. 24 settle at $45.26/b, while the front-month NYMEX October light sweet crude contract was down 3 cents/b (0.07%) at $42.59/b.
"Brent is off last week's highs above $45/b, but not by much. The benchmark is holding on to its Hurricane induced gains due to possible storm aftermath effects on global oil flows, which could see US refineries boost gasoline demand from Europe," said Stephen Innes, chief global markets strategist at AxiCorp, in a note Aug. 25.
Rising supply issues were at the forefront of traders' minds after tropical storms Marco and Laura are expected to cause significant disruption to refineries on the USGC.
More than 50% of US refining capacity is on the coast, with PADD III refining capacity, including condensate splitters, totaling over 10 million b/d, according to S&P Global Platts Analytics.
However, while Tropical Storm Marco was downgraded, resulting in WTI prices falling Aug. 25 morning, Tropical Storm Laura continues to strengthen and could become a powerful hurricane, according to media reports.
"This should keep oil traders on hurricane watch, providing a bid under WTI and a temporary distraction from pivoting to the US rig count rise and COVID-19 concerns," Innes added.
Meanwhile, rising coronavirus cases in Europe and Asia continue to weigh on market expectations of a quick recovery in short-term energy demand.
Global COVID-19 case count stood at 23,566,502, while deaths worldwide have crossed the 800,000 mark, latest data from Johns Hopkins University showed.
Separately, US commercial crude inventories are expected to decline by 4.3 million barrels at 508.2 million barrels, an S&P Global Platts analysis showed Aug. 24. This would represent the fifth consecutive week of drawdowns, making it the longest stretch of declines in a year.
Gasoline stocks are also expected to fall 2.7 million barrels to about 241.1 million barrels.
Market participants will look to fresh cues from inventory reports by the American Petroleum Institute and the US Energy Information Administration, due later Aug. 25 and on Aug. 26, respectively.
