0636 GMT: Crude oil futures were mixed during mid-afternoon trade in Asia Jan. 19, as investors reacted positively to Janet Yellen's comments on the proposed US stimulus package. However, coronavirus-related demand woes continue to weigh on the upstream complex.
At 2:36 pm Singapore time (0636 GMT), the ICE Brent March contract was 23 cents/b (0.42%) higher from the Jan. 18 close at $54.98/b, while the February NYMEX light sweet crude contract slipped 12 cents/b (0.23%) to $52.24/b.
"Like other asset classes, oil has received a gentle US stimulus tailwind in Asia, with both Brent and WTI futures moving modestly higher," OANDA's senior market analyst Jeffrey Halley said in a note.
Stephen Innes, APAC market strategist at AxiTrader, echoed similar sentiments in a note: "Many Covid jitters out here, still Oil continues to hold and looks to nudge higher eying support from the weaker US dollar as oil sensitive currencies are showing the way."
According to media reports, Janet Yellen, US President-elect Joe Biden's nominee to run the Treasury Department, will tell the Senate Finance Committee later Jan. 19 that the US government must "act big" with its next coronavirus relief package. Biden had outlined a $1.9 trillion stimulus package proposal last week, stressing that a bold investment was needed to jump-start the economy and accelerate the distribution of vaccines to bring the virus under control.
While crude prices were seen to have recouped some overnight losses, analysts reiterated that the rise in COVID-19 cases has once again reintroduced signs of weaker demand in Asia, denting sentiment.
"China and Japan have seen a flurry of cases which authorities are struggling to contain. In Europe and the US, the slow rollout of vaccines also raises concerns that a rebound in demand will remain elusive," ANZ analysts said in a Jan. 19 note.
Still, investors remained optimistic that the recent dip in oil prices could be temporary, given the overall supply tightness thanks to production cuts by Saudi Arabia.
Meanwhile, Libya's oil production is expected to fall by 200,000 b/d as some of the Waha oil fields will be offline due to pipeline maintenance, state-owned National Oil Corporation said late Jan. 18, adding that the pipeline that connects the Samah and Dahra fields to the 350,000 b/d Es Sider terminal will be shut for "necessary repairs" for two weeks.
Libyan crude and condensate production surged to about 1.25 million b/d last month, the highest since June 2014, according to S&P Global Platts estimates.
All eyes are now focused on American Petroleum Institute's preliminary data on last week's US crude stockpiles due later in the day, for more pricing indications.
"While most of the focus will be on the outlook for demand, supply issues remain important," ANZ analysts said.
