Crude oil futures steady on risk-on sentiment from US infrastructure bill

Crude oil futures were holding onto gains in mid-morning trade in Asia Aug. 11, after rising more than 2% overnight, on risk-on sentiment spurred by the passing of a major US infrastructure bill through the Senate and reports of a draw in US crude oil inventories.

At 9:46 am Singapore time (0147 GMT), the ICE October Brent futures contract was up 2 cents/b (0.03%) from the previous close at $70.65/b, while the NYMEX September light sweet crude contract was unchanged over the same period at $68.29/b.

The risk-on sentiment followed the passing of a $1.2 trillion infrastructure spending bill by the US Senate overnight, with several US equity indices closing at record highs.

The Infrastructure Investment and Jobs Act will provide $550 billion in new government spending to rebuild roads, bridges and other infrastructure in the US, as well as fund climate and clean energy programs.

"The passing of the bipartisan infrastructure bill by the US Senate has led to strength in cyclicals overnight, as the energy, industrials and materials sectors outperformed the broader market," IG market strategist Yeap Jun Rong said.

Oil prices were also supported by news of a 816,000-barrel draw in US crude oil inventories reported by the American Petroleum Institute overnight, which exceeded the expectations of analysts surveyed by S&P Global Platts Aug. 9 of a 600,000-barrel draw.

Investors will be looking to the Energy Information Administration's weekly report due for release at 10:30 am EST (1430 GMT) Aug. 11 to confirm the draw.

While concerns lingered over the spread of the delta variant, analysts in Asia said this has mostly been priced into the market.

"The rout that stemmed from delta variant concerns has run its course. The oil market is still heavily in deficit," OANDA senior market analyst Edward Moya said.

Nonetheless, COVID-19 caseloads remain high in the world's two largest oil-consuming economies. China's National Health Commission reported 108 new locally transmitted cases Aug. 10, up from 94 the day before, while the US' daily seven-day moving average has risen continuously since June. New US daily cases stood at 92,631 Aug. 9, up from 87,102 the day before, US Center for Disease Control and Prevention data showed.