Crude oil futures rise on US stock draw amid caution ahead of OPEC+ meeting

0221 GMT: Crude oil futures were higher during mid-morning trade in Asia July 1 after the Energy Information Administration reported a large draw in US crude inventories, but the upside was capped by lackluster US products data and caution ahead of the OPEC+ meeting scheduled for later in the day.

At 10:21 am Singapore time (0221 GMT), the ICE September Brent futures contract was up 30 cents/b (0.40%) from the previous settle at $74.92/b, while the NYMEX August light sweet crude contract was 28 cents/b (0.38%) higher at $73.75/b.

EIA data released late June 30 showed a headline US crude draw of 6.72 million barrels to 452.34 million barrels in the week ended June 25, almost 7% below the five-year average for this time of year and marking the sixth consecutive week of decline amid rising US refinery demand. Total US net crude inputs rose 190,000 b/d to average 16.3 million b/d in the week, while refinery utilization climbed 0.7 percentage points to 92.9% of total capacity, the highest since the week ended Jan. 3, 2020.

However the boost to global prices was limited, as the market had been expecting the large fall in crude inventories after the American Petroleum Institute a day earlier reported a 8.15 million-barrel draw for the same week, and the products data was lackluster. US gasoline inventories rose 1.52 million barrels to 241.57 million barrels in the week, while total product supplied for gasoline, the EIA's proxy for demand, slipped around 3% to a three-week low of 9.17 million b/d.

Distillate inventories slipped 870,000 barrels to 137.10 million barrels, even as implied demand rose 5.6% to 4.17 million b/d.

The relative stability in the market comes as investors await the OPEC+ meeting scheduled for later in the day, which was expected to provide guidance on the producer group's production quotas for August.

Analysts have said that given the demand-side risk posed by the resurgent spread of the Delta coronavirus variant, and with additional Iranian barrels potentially entering the market following a possible deal on the Joint Comprehensive Plan of Action, the coalition is likely to agree on a tempered increase of 500,000 b/d of oil production in August.

"Saudi Arabia remains cautious on demand and Iran nuclear talks, while Russia is more focused on regaining market share as demand rebounds," Platts Analytics said in a recent note. "However, with Brent already in the mid-$70s, both will likely be committed to not overheating the market."

Mele Kyari, the head of state-owned Nigerian National Petroleum Corp. and the country's representative at OPEC, has backed an easing of output cuts, as he said that oil prices were "very high" and starting to constrain both producers and consumers, S&P Global Platts reported earlier.

"The only way to pull down prices is to increase ... supply. So that is what is going to happen. OPEC is going to intervene to see how we can bring down prices," Kyari said on national television June 30.