Crude oil futures fell during the mid-morning trade in Asia July 21, as data from the American Petroleum Institute showed builds in US crude and gasoline inventories.
At 10:37 am Singapore time (0237 GMT), the ICE September Brent futures contract was down 51 cents/b (0.74%) from the previous close at $68.84/b, while the NYMEX September light sweet crude contract was down 53 cents/b (1.59%) at $66.67/b.
“While we saw a bit of a relief rally yesterday following Monday’s sell-off, the market is still trading below $70/b and has come under a bit of downward pressure in early morning trading today after a bearish and rather surprising inventory report from the API,” ING’s head of commodities strategy Warren Patterson and senior commodities analyst Wenyu Yao said in a June 21 note.
Data from the API, released late July 20, showed that US crude inventories had unexpectedly risen by 806,000 barrels in the week ended July 16, with US gasoline inventories also jumping 3.32 million barrels in the same period. Only distillate inventories recorded a decline, falling 1.23 million barrels in the week ended July 16.
The market is now awaiting data from the Energy Information Administration due to be released later July 21. If the EIA data confirms a crude stock build, then it would mark the first weekly rise in crude inventories since mid-May.
At the start of the week on July 19, the ICE Brent and NYMEX light sweet crude markers had mirrored the trajectory of the broader financial markets, plunging approximately 7% on the day as the rapid spread of the highly transmissible Delta variant of the coronavirus raised the threat of tighter mobility restrictions worldwide.
While prices recovered marginally on July 20, pandemic concerns continue to fester in the background. Edward Moya, senior market analyst at OANDA, said in a July 21 note that, “The crude demand outlook won’t improve much until the current Delta variant wave passes and vaccinations efforts improve globally.”
Nevertheless, Moya expressed optimism that most of the world will not commit to a big disruptive lockdown like last year, while the oil market will remain in deficit despite the impending increase in OPEC+ production.
The increase in OPEC+ supply is expected after the producer group reached a deal to increase production quotas by 400,000 b/d monthly August onward, and to extend their supply management pact through the end of 2022 with an upward revision in the reference production levels for the UAE, Saudi Arabia, Russia, Kuwait and Iraq.
Source: Platts