Crude oil futures climb on positive US economic data, stocks drawdown

Singapore — 0228 GMT: Crude oil futures were higher during mid-morning Asian trade Sept. 2 as the US' manufacturing data for August was stronger-than-expected and a private inventory report released late Sept. 1 showed a large surprising decline in the US' commercial crude inventories.

At 10:28 am Singapore time (0228 GMT), ICE Brent November crude futures were up 38 cents/b (0.83%) from the Sept. 1 settle at $45.96/b, while the NYMEX October light sweet crude contract was up 36 cents/b (0.84%) at $43.12/b. The ICE Brent November crude futures had settled at $45.58/b at the end of the Sept. 1 trading session, while NYMEX October had settled at $42.76/b.

"The forward-looking market had another sentiment reinforcement to work with in the form of the August US Institute for Supply Management manufacturing index surprise," Pan Jingyi, market strategist at IG, said Sept. 2.

"The more closely watched reading compared to the Markit index had yielded a surprise for August. Headline ISM manufacturing index having risen to 56.0, had reflected continued expansion for the US economy. It also marks the third consecutive reading above the 50 level," she added.

Better-than-expected US manufacturing data also came a day after a private gauge of Chinese manufacturing activity. The Caixin/Markit manufacturing PMI grew strongly, while official data released by the National Bureau of Statistics of China on Aug. 31 showed Chinese services PMI at its highest since 2018.

Meanwhile, a private inventory report by the American Petroleum Institute released Sept. 1 showed a larger-than-expected drawdown in US crude stockpiles for the week ended Aug. 28.

"With one more week of US driving season left, oil prices received a much needed helping hand from a bullish to consensus oil inventory draw. The American Petroleum Institute reported on Tuesday [Sept. 1] crude oil inventories declined 6.36 million barrels against a 1.8 million consensus," Stephen Innes, chief global markets strategist at AxiCorp, said in a Sept. 1 note.

Market participants will look to the more definitive weekly US inventory report due for release by the Energy Information Administration later Sept. 2 for further cues. Notably, it will be the sixth consecutive week of drawdown in US commercial crude inventories if the official EIA data confirms the API industry report released on Sept. 1 and would be ultimately bullish for the global crude complex.