0255 GMT: Crude oil prices rose during midmorning Asia trading Dec. 17, helped by the US Energy Information Administration's report of a fall in US crude inventories, and rising optimism about a US stimulus package and an accommodative monetary policy.
At 10:55 am Singapore time (0255 GMT), the ICE February Brent futures contract was up 37 cents/b (0.72%) from the Dec. 16 settle at $51.45/b while the NYMEX January light sweet crude contract was up 34 cents/b (0.71%) at $48.16/b. Both markers rose 0.63% and 0.42% Dec. 16 to settle at 10-month highs of $51.08/b and $47.82/b, respectively.
The EIA reported a 3.14 million-barrel draw in US commercial crude inventories at 500.1 million barrels during the week ended Dec. 11. The larger-than-expected draw boosted sentiment, with analysts surveyed by S&P Global Platts expecting only a 1.9 million-barrel decline.
The EIA report showed that US gasoline inventories rose 1.02 million barrels at 238.88 million barrels in the period. Nevertheless, this build came below analysts' expectations of a 2.6 million-barrel build.
Weekly implied demand for gasoline, though up 5% on the week at 7.98 million b/d, remained weak and was still more than 15% behind year-ago levels as driving activity in states hit hard by the pandemic, such as California, remained low, the EIA report showed.
Total distillate inventories also climbed 170,000 barrels at 151.26 million barrels, with the rise also smaller than analysts' expectations of a 1.1 million barrel build.
At 10:55 am, the NYMEX January RBOB contract was trading 1.21 cents/gal (0.81%) higher than the Dec. 16 settle at $1.3650/gal, and the NYMEX January ULSD contract was up 0.96 cents/gal (0.65%) at $1.4875/gal.
Meanwhile, stimulus optimism continued to simmer, with media reports saying that US congressional leaders are nearing a relief bill worth roughly $900 billion. This relief package is larger than the $748 billion package that seemed to gain support earlier in the week, and include a new round of stimulus checks.
Additionally, the Federal Open Market Committee, or FOMC, at the end of its Dec. 15-16 meeting, said it will keep buying at least $120 billion/month of debt to continue bolstering a US economic recovery until "substantial further progress has been made towards the committee's maximum employment and price stability goals."
"Broadly, as seen through the Fed's dot plot projections, whereby the median expectations remain for rates to stay unchanged through 2023, there are little expectations for changes to come along to shake confidence in the near to medium term. At the same time, the focus had been set on the US Congress with talks of the $900 billion relief package coming along," said Pan Jing Yi, market strategist at IG, in a Dec. 17 note.
Stephen Innes, chief global market strategist at Axi, said the dovishness of the FOMC portends well for oil prices. "The market remains in buy on dip mode ahead of likely US stimulus bounce as the downside risk remains triple inoculated by the vaccine, US stimulus expectations, and OPEC's unwavering commitment to defend oil prices."
