Singapore—0310 GMT: Crude oil prices remained rangebound during midmorning trade in Asia Dec. 16 as the American Petroleum Institute's report of a build in crude and product inventories tempered any bullishness from progress in the US stimulus negotiations.
At 11:10 am Singapore time (0310 GMT), the ICE February Brent futures contract was down 2 cents/b (0.04%) from the Dec. 15 settle at $50.74/b while the NYMEX January light sweet crude contract was unchanged at $47.62/b. Brent had risen 0.93% on Dec. 15 to settle at $50.76/b.The API reported a 1.97 million-barrel build in US crude inventories in the week ended Dec. 11. The API data also indicated unimproved fundamentals in downstream markets as it showed an 828,000-barrel and a 4.76 million-barrel build in gasoline and distillate inventories, respectively.
Meanwhile, the International Energy Agency on Dec. 15 lowered its oil demand estimates for 2020 and 2021 by 50,000 b/d and 170,000 b/d, respectively, against the backdrop of rising COVID-19 infection numbers and renewed lockdowns.
In its latest monthly report, the IEA said while strong Asian demand and effective OPEC+ supply management had galvanized a recovery in oil prices, it "will be several months before we reach a critical mass of vaccinated, economically active people and thus see an impact on oil demand."
The IEA's statement comes after the OPEC on Dec. 14 also trimmed its estimate of global demand by 1 million b/d for the first quarter of 2021 and by 620,000 b/d for the second quarter.
Progress on the US stimulus package cushioned the impact of these bearish developments, as a bipartisan group of lawmakers presented two compromise bills totaling $908 billion to break the impasse before the Christmas recess.
The first bill will provide $748 billion of funding for measures that have been agreed upon by both the Democrats and the Republicans, while the second bill worth $160 billion will comprise of the issues that the sides are yet to compromise on, namely state and local aid, and a COVID-19 "liability shield."
The optimism about fiscal relief intensified after House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell, along with other senior congressional leaders, met on Dec. 15 to discuss the package.
The US stimulus package is expected to inject life into the ailing US economic recovery, and could thus shore up demand in the oil market.
"The API data missed on the wrong side for oil bulls, but with so much stimulus optimism stuffing oil barrels at the moment, any push lower could be viewed as an opportunity to buy with crude stocks trimming again this week," said Stephen Innes, chief global strategist at Axi, in a Dec. 16 note.
