Singapore—0251 GMT: Crude oil futures were lower in mid-morning trade in Asia April 21 after the American Petroleum Institute reported a build in US crude inventories, a resurgent pandemic prompted further demand concerns in India and Japan, and signs of progress emerged from US-Iran nuclear talks.
At 10:51 am Singapore time (0251 GMT), the ICE Brent June contract was down 49 cents/b (0.74%) from the April 20 settle at $66.08/b, while the June NYMEX light sweet crude contract was 50 cents/b (0.8%) lower at $62.17/b.The API data released late April 20 showed a 436,000-barrel build in US crude inventories for the week ended April 16. The build, while small, put pressure on prices as it was contrary to market expectations of a large draw. The API's downstream product inventory data was mixed, showing a 1.62 million-barrel draw in US gasoline inventories and a 655,000-barrel build in US distillate inventories in the week.
The unexpected build in US crude stocks data came as a resurgence in coronavirus infections in India and Japan was already weighing on sentiment. India imposed a week-long lockdown in many parts of the country April 19 in a bid to curb the spread, and market analysts expect more prefectures in Japan to re-impose a state of emergency.
"With new COVID-19 waves bringing risks onshore, unless there is a quick reversal of tide, it would likely require a re-rating lower of global oil demand forecasts for this year," said Stephen Innes, chief global market strategist at Axi, in an April 21 note.
"This latest COVID-19 surge has wrong-footed more than few traders who were building long positions ahead of what is expected to be a successful US summer driving season," he added.
Signs of progress in US-Iran nuclear negotiations were also weighing on sentiment, after Iranian President Hassan Rouhani said April 20 that the talks in Vienna had progressed by around 60%-70%. A breakthrough in negotiations could see the lifting of US sanctions on Tehran's energy sector, adding more crude to a market that is already grappling with the impending easing of OPEC+ production cuts.
"Compounding matters is the more optimistic tone from Iran nuclear talks... an accelerated return to total production for Iran would mean some near- to medium-term pressure on prices," Innes said.
Market participants were also keeping an eye on a No Oil Producing and Exporting Cartels or NOPEC Act being advanced by the US House Judiciary Committee April 20, which could potentially open up OPEC to antitrust lawsuits.
"This is not first time Congress has introduced measures to take aim at OPEC, but this NOPEC bill should struggle to get approval from both chambers," said Edward Moya, senior market analyst at OANDA, in a April 21 note.
