0302 GMT: Crude oil futures rose during the mid-morning trade in Asia Nov. 25, extending overnight gains, as vaccine-related enthusiasm and easing political uncertainty in the US cushioned the impact of bearish data from the American Petroleum Institute.
At 11:02 am Singapore time (0302 GMT), ICE Brent January crude futures were up 78 cents/b (1.63%) from the Nov. 24 settle to $48.64/b, while the NYMEX January light sweet crude contract was up 72 cent/b (1.60%) at $45.63/b. Both crude markers had risen 3.91% and 4.30% to settle at eight-month highs of $47.86/b and $44.91/b, respectively.
The crude rally continued this morning despite bearish data from the API released Nov. 24, which showed that US crude inventories had risen 3.8 million barrels in the week ended Nov. 20. The API had earlier also reported a 4.174 million-barrel build in crude inventories in the week ended Nov. 13.
The API data also indicated weak fundamentals in the downstream markets, as it showed a 1.3 million-barrel build in US gasoline inventories in the week ended Nov. 20. The one positive from the report was that distillate inventories have continued to fall, and that they were down 1.8 million barrels in the week ended Nov. 20.
At 11:02 am Singapore time, the NYMEX December RBOB contract was trading 1.73 cents/gal (1.37%) higher than the Nov. 24 settle at $1.2755/gal and the NYMEX December ULSD contract was up by 1.37 cents/gal (1.01%) at $1.3732/gal.
The unfavorable data from the API had little effect on oil prices this morning, as the market continued to ride the confluence of a number of bullish developments, including most significantly the Oxford-AstraZeneca vaccine, which analysts have hailed as game changer due to its relative ease of production and distribution.
Vandana Hari, CEO at Vanda Insights, told S&P Global Platts on Nov. 25: "While the past couple of weeks, the market needed headlines from new vaccine trials to sustain the cheer, it seems like the vaccine optimism has now acquired a momentum of its own. The market, which is fatigued from the months of pessimism and distress, is looking at the light at the end of the tunnel, disregarding at least the next two to three quarters of vaccine distribution."
"Short-sellers, whose sentiment has only recently flipped from bearish to bullish, might also be rushing in to cover their shorts on the notion that optimism will carry prices until the actual results of the vaccine are seen on oil demand," Hari added.
In a Nov. 25 note, ANZ analysts also noted that the start of president-elect Joe Biden's transition process and the anticipated nomination of former Federal Reserve Board chair Janet Yellen as Treasury Secretary has also soothed political unease, and has given the markets a boost.
The market now awaits the upcoming OPEC and non-OPEC Ministerial Meeting on Dec. 1, which is expected to provide clarity over the OPEC+ alliance's production plan going into 2021.
"I believe that the OPEC+ alliance will play it safe and roll-over the current production cuts for at least another quarter next year. But the latest surge in prices is going to make for some really difficult conversations when the ministers meet," Hari concluded.
