Crude oil futures steady to lower after overnight gains; positive outlook

Crude oil futures were steady to lower during mid-morning Asia trade Sept. 3 following overnight gains, amid the retreat in the US dollar and as remnants of Hurricane Ida continued to shut US terminals in the East Coast.

At 12:19 pm Singapore time (0419 GMT), the ICE November Brent futures contract was down 1 cent/b (0.01%) from the previous close at $73.02/b while the NYMEX October light sweet crude contract was down 14 cents/b (0.2%) at $69.85/b.

"Crude prices seem to be volatile this morning, hovering between the green and red zone," Vandana Hari, CEO of Vanda Insights told Platts Sept 3.

"However, on a boarder perspective, the market seems to be on a positive note, supported by the bullish data from the Energy Information Administration and retreat of the dollar," Hari said, adding that the market is also awaiting further cues as production outages from the impact of Hurricane Ida will be prolonged, but overall fundamental seems to be bullish.

The latest Energy Information Administration data released late Sept. 2 showed that US crude inventories fell 7.2 million barrels to 425.4 million barrels for the week ended Aug. 27, bringing inventories to roughly 6% below the five-year seasonal average.

At 11:57 am Singapore time, the ICE US Dollar Index fell to 92.21, down from the previous close of 92.23 and on pace to close at its weakest since July 29.

Meanwhile, the latest data released by the US Department of Labor showed that weekly initial jobless claims stood at 340,000 for the week ended Aug. 28, marking its lowest since the start of the pandemic in mid-March 2020.

Jobless claims totaled 340,000 for the week ended Aug. 28, compared with market estimates of 345,000.

Elsewhere, the remnants of Hurricane Ida has resulted in historic flash flooding along the US' East Coast, shutting terminals in the area, with some regions receiving up to 10 inches of rainfall already, according to the US National Weather Service on Sept. 2.

"Refiners are struggling getting power back, but optimism is that things should mostly be back to normal in a few weeks," Oanda's senior market analyst Edward Moya said in a Sept. 3 note.

UOB research analysts said in a Sept. 3 note that investors are confident that the market can absorb the upcoming additional supply hikes from OPEC+.

Anticipating global oil demand ahead, the OPEC+ alliance agreed Sept. 1 to hike their collective crude production by 400,000 b/d in October, in line with their original plans to keep easing back their historic output cuts.

Sharing on an optimistic view, Moya added that WTI crude is brushing up against the 50-day SMA, which suggests further bullish momentum could target the July highs if prices close above $70.25/b.