Crude lower after API data reflects build in US gasoline inventories

Singapore — 0232 GMT: Crude oil futures were lower in mid-morning trade in Asia on Aug.19 after American Petroleum Institute data released late Aug.18 showed a surprisingly large build in gasoline inventories even as US commercial crude supplies fell for a consecutive fourth week.

At 10:32 am Singapore time (0232 GMT), the ICE Brent October crude futures were down 27 cents/b (0.59%) from the Aug.18 settle at $45.19/b, while NYMEX September light sweet crude contract was down by 18 cents/b (0.42%) at $42.71/b.

"API reported a big build in gasoline inventories, which has somewhat taken the edge off the bullish market sentiment," Stephen Innes, chief global markets strategist at AxiCorp, said in a note Aug.19.

"Summertime builds are never received well, but particularly towards the end of this summer as there is some concern the virus could rage again during colder winter months in the northern hemisphere and further crimp gasoline demand," he added.

Meanwhile, US commercial crude inventories were reported to have declined by 4.26 million barrels for the week ending Aug.14, slightly higher than the 3.8 million barrels drawdown S&P Global Platts estimated on Aug.17.

Notably, it will be the fourth consecutive week of drawdown for US commercial crude inventories if the official weekly US inventory report due for release by the Energy Information Administration later in the day confirms the API industry report on Aug.18.

Meanwhile, the continued spread of COVID-19 worldwide remains the key drag on the short-term demand outlook. Global COVID-19 infections exceeded 22 million case counts while total deaths reached 779,443, latest data from John Hopkins University showed.

A resurgence of infections in major European economies also reignited concerns that global economic recovery will continue to slow as countries tightened pandemic containment restrictions. The number of new cases in Germany reached four-month highs on Aug.17, while Spain registers 16,000 new infections in three days, according to media reports.

Elsewhere, members of the OPEC+ alliance will be meeting to discuss about compliance and compensation cuts through September for members who failed to abide by their output quotas from May to July in the Joint Ministerial Monitoring Committee meeting.

"While there is still plenty of uncertainty over the demand outlook, along with weaker Brent time spreads, physical values and continued weakness in refinery margins, it is largely expected that OPEC+ will continue with the deal in its current form, and retain cuts of 7.7 MMbbls/d for now," ING analysts said in a note Aug.19.