0248 GMT: Crude oil futures rose during mid-morning trade in Asia Feb. 4, as the US Energy Information Administration reported a draw in crude inventories and as the OPEC+ meeting concluded with a sense of urgency to uphold existing supply curb commitments.
At 10:48 am Singapore time (0248GMT), the ICE Brent April contract was up 40 cents/b (0.68%) from the Feb. 3 settle to $58.86/b, while the March NYMEX light sweet crude contract was up 41 cents/b (0.74%) to $56.10/b.
The rise in oil futures came on the back of the EIA data released on Feb. 3, which showed a 994,000-barrel draw in US crude inventories in the week ended Jan. 29. Analysts surveyed by S&P Global Platts had expected a 2.4 million-barrel draw.
Although the crude draw was slightly below estimates, it still highlights tightness developing across global oil markets, according to a Feb. 4 note by ANZ analysts.
Stephen Innes, chief global markets strategist at Axi, echoed the same in a Feb. 4 note, adding that, "Declining [crude] stocks indicate recovering demand and will make it easier for OPEC+ to gradually normalize production and reduce the spare capacity cushion that limits oil upside over the medium term."
The bullish effect of the crude oil inventory data, however, was tempered by a large build in gasoline inventories of 4.47 million barrels over the same week.
Regardless, market analysts remained optimistic over the demand outlook for oil amid expectations of rising heating demand during the winter season.
The OPEC+ Joint Ministerial Monitoring Committee's meeting wrapped up with no changes in production quotas being announced for February and March, in line with market expectations.
While the committee noted that the gradual progress in vaccine rollout will boost the global economy and oil demand, it reiterated the importance of meeting agreed upon supply curbs and compensating for past overproduction when necessary.
With production cuts in place and improving demand outlook amid global vaccine rollouts, OPEC+ expects oil inventories to fall below the five-year average by the middle of 2021.
"While global economic data has been improving, there are still plenty of residual lockdown concerns as evidenced by yesterday's [Feb. 3] China service PMI slump. Still, OPEC's disciplined supply management regimen continues to help investors look through any near-term uncertainty," Innes added.
