Crude oil futures edge lower on profit-taking after mid-week gains

Crude oil futures edged lower in mid-morning trade in Asia Sept. 17 amid profit-taking by investors after strong mid-week gains, and as markets assessed the prospect of returning supply in the US Gulf Coast and a fresh COVID-19 outbreak in China.

At 10:41 am Singapore time (0241 GMT), the ICE November Brent futures contract was down 16 cents/b (0.21%) from the previous close at $75.51/b, while the NYMEX October light sweet crude contract was 15 cents/b (0.21%) lower at $72.46/b.

Demand concerns have resurfaced as China battles a fresh outbreak of COVID-19 cases in southern Fujian province. The country's National Health Commission recorded 49 locally transmitted cases Sept. 15 and 50 the day before.

Supply from the US Gulf Coast was also gradually returning to normal after 95% of US Gulf oil and gas production was shut in late August due to Category 4 Hurricane Ida; 513,878 b/d of crude or 28.2% remained offline as of Sept. 16, according to the US Bureau of Safety and Environmental Enforcement.

"With the oil industry still recovering from Hurricane Ida, the arrival of Hurricane Nicholas this week stoked fears of further disruptions. However, that risk appears to have abated, with companies reporting little disruption in Texas," ANZ Research analysts said in a note.

Nonetheless, crude prices recorded strong gains mid-week, with both benchmarks on track to settle higher by at least 3.5% on the week.

Commercial crude oil stocks in the US have fallen for six straight weeks, with the most recent report from the US Energy Information Administration showing a 6.42 million-barrel draw to 417.45 million barrels last week. US crude oil stocks now looked set to push past pre-pandemic lows of 416.07 million barrels for 2019.

Analysts remained bullish on oil prices going into the end of the year, with Goldman Sachs earlier in September expecting ICE Brent to top $80/b by year end and Bank of America Global Research citing a $100/b price target within the next six months in the event of a colder-than-expected winter.