Crude oil futures slide on US stock build, concerns over pandemic deepen

Singapore — 0303 GMT: Crude oil futures fell during mid-morning Asian trade April 22 following the latest release of the US Energy Information Administration's weekly statistics, which was a mixed bag, and as sentiment slumped on pandemic-induced demand concerns after India reported record high COVID-19 infections.

At 11:03 am Singapore time (00303 GMT), the ICE Brent June contract was down 28 cents/b (0.42%) from the April 21 settle at $65.04/b, while the June NYMEX light sweet crude contract was 30 cents/b (0.49%) lower at $61.05/b.

EIA data released late April 21 showed that commercial crude stocks had climbed 600,000 barrels to 493.02 million barrels in the week ended April 16. The build came as a surprise to analysts, who had expected inventories to fall by 4.4 million barrels instead, according to an S&P Global Platts survey.

The EIA data was mixed for downstream product inventories, with gasoline stocks edging up 90,000 barrels and distillate stocks falling 1.07 million barrels last week.

Of particular concern to the market was the total product supplied figure, EIA's proxy for demand, which fell almost 8% from the week prior at 18.76 million b/d in the week ended April 16. The market, however, received solace from rising gasoline demand, which averaged 9.1 million b/d last week, up 1.8% from the week prior and the highest since August.

Over in Asia, the rise in COVID-19 cases in Japan and India portends curtailed energy demand in the region. India reported a record 295,158 cases on April 20, latest data from John Hopkins University showed, even as large parts of country remained under lockdown. Meanwhile, Japan is also considering putting Tokyo and Osaka under a state of emergency, media reports showed.

"Concerns of weaker demand in key markets such as India are weighing on prices...Prime Minister Modi has also hinted at further restrictions on business if infections continue to spread," ANZ analysts said in an April 22 note.

Analysts also noted that market participants were keeping an eye on the latest iteration of the No Oil Producing and Exporting Cartels, or NOPEC Act, that was advanced by the US House Judiciary Committee on April 20. The act could potentially open OPEC+ to antitrust lawsuits for its role in propping up oil prices through its production cuts.

OPEC+ officials, however, are unconcerned, as NOPEC bills have been repeatedly introduced over the last two decades, and have failed to make it through the US Congress.

"This law is already a hundred years old," Russian Deputy Prime Minister Alexander Novak told reporters. "I read the news that the judicial committee in the Congress made such a decision, but the law itself has not yet been passed. It has been under discussion for many years."