Crude oil futures inches higher on lower US stock, bullish outlook

Crude oil futures inched higher in midmorning Asian trade Feb. 9, continuing its uptrend amid bullish fundamentals after closing lower at the $90/b level the previous day.

At 10:42 am Singapore time (0242 GMT), the ICE April Brent futures contract was up 28 cents/b (0.31%) from the previous close at $91.06/b while the NYMEX March light sweet crude contract rose 21 cents/b (0.24%) at $89.57/b.

"We see the $90.00 handle as a key support level for Brent and expect the key oil benchmark to continue trading above this level for the time being due to the underlying bullish momentum," OCBC Treasury Research analysts said in a note Feb. 9.

The uptick in price comes amid a dip in US crude oil inventories and as the US Energy Information Administration raised its global oil demand forecast and oil price estimates for 2022.

US crude oil inventories fell 2 million barrels in the week ended Feb. 4, according to the American Petroleum Institute, media reports indicated. Gasoline stocks fell 1.1 million barrels over the same period while distillate stocks declined 2.2 million barrels.

"Supply is not keeping up with the demand," White House press secretary Jen Psaki said during a White House press briefing Feb. 8. "We know that is the core issue. Nobody should hold back supply at the expense of the American consumer, particularly as the recovery from the pandemic continues.

"And oil producers around the world have the capacity to produce at levels that match demand and reduce the high prices."

The EIA estimated global demand to increase by 90,000 b/d to 100.61 million b/d for 2022, and by 210,000 b/d to 102.48 million b/d in 2023, it said Feb. 8 in its latest Short-Term Energy Outlook.

"However, oil production might not meet our expectations because of possible changes in production targets from OPEC+, continuing technical issues among some producers, and changes in the investment decisions of US tight oil operators, among other possible reasons," the EIA said.

OPEC crude production is expected to average 28.17 million b/d in the first quarter of 2022, a cut of 220,000 b/d from its prior estimate, while EIA raised its forecast for Q2 2022 by 340,000 b/d to 28.51 million b/d.

EIA also significantly raised its forecast of oil prices from prior estimates, with Brent now expected to average at $82.87/b, up $7.92/b from the prior month, and it now sees WTI in 2022 averaging $79.35/b, up $8.03/b from last month.