Crude oil futures mostly steady, outlook remains bullish

Crude oil futures were mostly steady in mid-morning Asian trade April 8, consolidating after recent heavy losses as the long-term outlook for oil prices remained bullish despite the US and IEA's plans for a massive oil reserve release.

At 10:22 am Singapore time (0222 GMT), the ICE June Brent futures contract was down 4 cents/b (0.04%) from the previous close at $100.54/b, while the NYMEX May light sweet crude contract rose 13 cents/b (0.14%) to $96.16/b.

Oil prices have shed over $10/b since the US, followed by the IEA, announced March 30 oil reserve releases totaling around 240 million barrels over the next six months.

Despite the short-term pressure on prices, analysts said fundamentals remained bullish. Falling Russian oil exports, as well as inadequate supply increases from the OPEC+ group, more than made up for any added supply from storage.

"I still think at some point, the sentiment-driven sell-off will give way, and fundamentals will reassert themselves, especially as more market participants start fretting about how will the US administration replenish the SPR drawdown," said SPI Asset Management Managing Partner Stephen Innes in an April 8 note.

Meanwhile, OPEC+ continued to struggle to raise output to adequate levels despite stated plans to the contrary.

Crude oil production by OPEC and its allies fell in March from February for the first time in more than a year, the latest S&P Global Commodity Insights survey found April 7, contributing to a tightening market thrown in flux by the Russia-Ukraine war.

OPEC's 13 members raised output by 60,000 b/d to 28.73 million b/d, but that was more than offset by a 160,000 b/d decline by the bloc's nine allies, who pumped 13.91 million b/d.

Any sustainable relief from high oil prices will likely come from the US, where production has started to inch up in the last two weeks after remaining stagnant for almost two months.

US oil production rose by 200,000 b/d over the prior two weeks to April 1 to 11.8 million b/d, the latest Energy Information Administration data showed.

Data from energy analytics and software company Enverus also showed April 7 that the US oil and gas rig count jumped 12 to 791 for the week ended April 6, reversing two weeks of minor rig losses, with the giant Permian Basin of West Texas/New Mexico gaining the most and reaching its highest level since just after the pandemic began.

Ten US oil rigs were added to the domestic fleet, making 618 for the week, Enverus said.

Dubai crude swaps were higher in mid-morning trade in Asia April 8 from the previous close, though intermonth spreads fell.

The June Dubai swap was pegged at $95.13/b at 10 am Singapore time (0200 GMT), up 70 cents/b (0.74%) from the April 7 Asian market close.

The May-June Dubai swap intermonth spread was pegged at 78 cents/b at 10 am, down 31 cents/b over the same period, and the June-July intermonth spread was pegged at 50 cents/b, down 9 cents/b.

The June Brent/Dubai EFS was pegged at $5.90/b, down 97 cents/b.