Crude lacks direction amid mixed US supply outlook, pandemic risks

Crude futures finished a directionless session mixed Jan. 21 amid expectations of rising US inventories and pandemic-blunted demand outlooks.

NYMEX March WTI settled down 18 cents at $53.13/b, while ICE March Brent climbed 2 cents to $56.10/b.

Oil futures came under pressure overnight after American Petroleum Institute data released late Jan. 20 showed US crude stockpiles climbed 2.6 million barrels in the week ended Jan. 15. While the build would be in line with seasonal norms, many in the market had expected a five-week inventory draw to extend. Analysts surveyed by S&P Global Platts Jan. 19 had called for a 2.5 million-barrel draw.

The US Energy Information Administration weekly inventory estimates are delayed to Jan. 22 due to federal holidays this week.

In China, multiple cities, including Beijing, have imposed restrictions amid an outbreak of coronavirus, reigniting concerns over the pandemic in Asia. Authorities have asked citizens not to travel during the Chinese New Year holidays, which could hurt domestic demand for road fuels.

"Crude prices can't shake off rising concerns that the demand outlook might get a big short-term hit if China experiences a debilitating wave of new coronavirus cases," OANDA senior market analyst Edward Moya said in a note. "WTI crude seems poised to hover slightly above the $50 level unless we see more lockdowns emerge out of Asia."

But against this backdrop the energy complex found support from a weaker US dollar and expectations of a $1.9 trillion US economic stimulus package planned by the new Biden administration.

The ICE US Dollar Index was holding at around 90.095 in afternoon trading, on pace for the lowest close since Jan. 12.

RBOB futures found additional support amid signs that US gasoline supply continued to tighten last week.

API data showed US gasoline inventories climbed 1.13 million barrels in the week ended Jan. 15, well below the roughly 4 million-barrel build typically seen during the period. The API figure would leave total US gasoline inventories nearly 1.8% behind the five-year average of EIA data, out from 0.7% during the week prior and marking the largest deficit to the average since May 2019.

The front month ICE New York Harbor RBOB crack versus Brent climbed to around $8.98/b in afternoon trading Jan. 21, testing five-month highs seen earlier in January.