Singapore—0249 GMT: Crude oil futures fell further in mid-morning trade in Asia Dec. 23 as bearish data from the American Petroleum Institute took the market by surprise, and as US President Donald Trump rejected a Congress-approved $900 billion stimulus bill.
At 10:49 am Singapore time (0249 GMT), the ICE Brent February contract was down 78 cents/b (1.56%) from the Dec. 22 settle at $49.30/b, while the February NYMEX light sweet crude contract was down 75 cents/b (1.60%) at $46.27/b. The markers closed down 1.63% and 1.98% respectively on Dec. 22.The latest fall in crude prices came as the API reported an unexpected 2.7 million-barrel build in US crude inventories for the week to Dec. 18. Analysts surveyed by S&P Global Platts had been expecting a 4.7 million-barrel decline.
The API data also indicated little improvement in fundamentals in downstream oil product markets, showing a modest draw of 224,000 barrels in gasoline inventories and a 1.03 million-barrel build in distillate inventories.
"Even though traders are used to seeing such API numbers by now, I think that they are still being a little cautious going into the Christmas weekend by locking their profits," David Lennox, resource analyst at Fat Prophets, told S&P Global Platts Dec. 23.
Meanwhile, the political flip-flop over US fiscal relief measures continued as Trump called a $900 billion stimulus package passed by both the Senate and the House of Representatives a "disgrace".
In a video message posted to twitter, Trump said that he would ask the "Congress to amend this bill and increase the ridiculously low $600 [direct payment] to $2,000, or $4,000 for a couple".
"I'm also asking Congress to immediately get rid of the wasteful and unnecessary items from this legislation and just send me a suitable bill," he added.
Trump's statements have revived uncertainty over fiscal relief, and analysts expect any delay in the ratification of the package to weigh on oil demand and prices.
"Sentiment took a hit after President Trump asked Congress to amend the COVID-19 relief-funding package, leading crude oil prices lower ... a further delay in the arrival of stimulus funds may hinder a fragile economic recovery and thus dampen the energy demand outlook," DailyFX strategist Margaret Yang told Platts Dec. 23.
Lennox said the refusal of Trump to sign off on the bill has "put some fear back into the markets as without fiscal relief, the US economic climate will deteriorate and oil demand will not improve."
Other bearish developments putting pressure on prices include renewed travel restrictions to the UK after the emergence of a new strain of coronavirus, a stronger US dollar and a slowdown in Asian demand.
"A slowdown of purchases in the physical oil market may hint at a further price pullback as Asian oil refiners have almost fulfilled their needs for spot cargoes to be loaded in January and February, while the virus threat and a stronger US dollar also continue to weigh on prices," Yang said.
