Crude rangebound as market weighs US inventory, product demand data

Singapore — 0255 GMT: Crude oil futures were trading steady to lower in mid-morning trade in Asia July 9 as the market weighed an increase in both US crude stocks and refined product demand.

At 10:55 am Singapore time (0255 GMT), ICE Brent September crude futures were down 6 cents/b (0.14%) from the July 8 settle at $43.23/b, while the NYMEX August light sweet crude contract was 9 cents/b (0.22%) lower at $40.81/b.

US commercial crude oil inventories for the week ended July 3 increased by 5.7 million barrels from the previous week to 539.2 million barrels, nearly 18% above the five-year average, according to data released by US Energy Information Administration July 8.

However, there was a significant drawdown in gasoline stocks as inventories decreased by 4.8 million barrels for the week ended July 3, even as it remained about 8% above its five-year average.

"The silver lining in the inventories reports was the decline of gasoline inventories by 4.8 million barrel, which signaled strong fuel demand," ANZ analysts said in a note July 9.

Latest data from data analytics company Kayrros also showed that regular driving demand rose in every US state in the previous week, except for Arizona, Texas and Florida, which of late have seen a sharp spike in COVID-19 cases.

At the same time, total products supplied, often used as a proxy for demand, was up 766,000 b/d to 18.1 million b/d for the week ended July 3. This lifted the four-week rolling average up to 17.8 million b/d and came in at just 15.1% below consumption in the year-ago period.

Gasoline demand also climbed to 8.8 million b/d, up 2.4% on the week, while jet fuel demand rose by 336,000 b/d to 924,000 b/d, a 14-week high but still 56% below the previous year.

"Not only is gasoline demand up, suggesting US consumers are integrating back into the world, but just as crucial for oil demand, the gnarly counter-seasonal gasoline build has been revered suggesting gasoline demand is back on seasonal trend boosted by summer driving season," Stephen Innes, chief global markets analyst at AxiCorp, said in a note July 9.

Meanwhile, the number of coronavirus cases in the US continued to climb, surpassing three million, with a new single-day record high of over 60,000 new infections reported July 8, according to media reports.

"The Fed's Bostic reiterated that the infections spikes are clouding the reopening outlook, but a broad shutdown isn't expected," the ANZ analysts said, in reference to Raphael Bostic, the President of the Federal Reserve Bank of Atlanta.