Crude oil futures steady on mixed EIA report, US calls for increased OPEC+ supply

0338 GMT: Crude oil futures were slightly higher during midmorning trade in Asia Aug. 12 on a weaker dollar, but a mixed report from the US Energy Information Administration and calls from the White House for an increase in OPEC+ supply limited the market's upside potential.

At 11:38 am Singapore time (0338 GMT), the ICE October Brent futures contract was up 11 cents/b (0.15%) from the previous close at $71.55/b while the NYMEX September light sweet crude contract was also up 11 cents/b (0.16%) at $69.36/b.

The uptick in prices came amid a depreciation of the dollar after data from the US Labor Department showed that the rise in the core US Consumer Price Index in July was both lesser than market expectations and than the rise seen in June. Core CPI rose 0.3% in July, just shy of market expectations of 0.4% and significantly below the 0.9% jump seen in June.

The US dollar index was trading at 92.90 at 11:28 am Singapore time, down 0.167% from Aug. 10 close. A weaker dollar makes dollar-denominated assets, such as oil futures, more attractive to buyers holding foreign currency, and hence boosts their demand.

Meanwhile, the weekly EIA report released late Aug. 11 showed total US crude commercial stocks declining 450,000 barrels in the week ended Aug. 6 to 438.78 million barrels. The draw reported by the EIA came in short of the 600,000-barrel draw expected by analysts surveyed by S&P Global Platts, and was also smaller than the 816,000 barrel draw reported by the American Petroleum Institute a day earlier.

Downstream products data was mixed, with any bullishness from a 1.4 million barrel decline in US gasoline inventories to 227.47 million barrels offset by a 1.77 million-barrel jump in US distillate inventories to 140.51 million barrels.

The fall in gasoline inventories was not necessarily indicative of improved demand-side fundamentals, which the data suggests have instead deteriorated amid a rise in COVID-19 infections in the country.

Implied gasoline demand fell around 3.5% on the week to 9.43 million b/d, while total implied demand for all products slid nearly 8% to 19.51 million b/d -- a four-week low.

Analysts said the market also has come under pressure after media reports surfaced that the Biden administration has called for OPEC+ to increase oil supply in excess of the coalition's current plan to add back 400,000 b/d of oil monthly from August onward.

OPEC+ has received similar calls from other countries, including India, all of whom have said the producer group's output cuts have led to higher oil prices, which could jeopardize the global economic recovery.

US National Security Advisor Jake Sullivan echoed this view Aug. 11, while adding that crude oil futures are now trading at higher prices than prepandemic levels.

"While OPEC+ recently agreed to production increases, these increases will not fully offset previous production cuts that OPEC+ imposed during the pandemic until well into 2022," Sullivan said. "At a critical moment in the global recovery, this is simply not enough."