Crude oil futures maintain overnight gains on bullish EIA data

Singapore — 0319GMT: Oil futures were rangebound during mid-morning trade in Asia Oct. 1, maintaining overnight gains, as positive data from the US Energy Information Administration provided some relief from the continuing onslaught of bearish factors.

At 11.19 am Singapore time (0319 GMT), ICE Brent December crude futures were trading at $42.30/b, unchanged from the Sept. 30 settle, while the NYMEX November light sweet crude contract was at $40.17/b, down 5 cents/b (0.12%). Both international crude markers had ended the Sept. 30 trading session significantly higher, with the December contract for Brent and the November contract for WTI rising 1.78% and 2.37% on the day, to settle at $42.30/b and $40.22/b, respectively.

The EIA report showed that during the week ended Sept. 25, US crude inventories had dropped 1.98 million barrels to 492.43 million barrel, which was only 12.4% more than the five-year average crude inventory -- the lowest overhang since late May.

The data also revealed that US distillate inventories were 3.18 million barrels lower that the same week, despite a 1% increase in refinery utilization to 75.8% of refining capacity, with the sore spot in the report being a 680,000-barrel increase in gasoline stocks.

Nonetheless, the EIA data surpassed expectations and spurred bullish sentiment in the market. AXI's chief global markets strategist Stephen Innes said in an Oct. 1 note: "The latest report paints a much less gloomy picture of oil demand than oil specialists suspected."

Innes, however, cautioned that following the resurgence of the coronavirus pandemic, and amid noise of a potential US stimulus package, "the sentiment will remain sensitive to news flow on the coronavirus and the outlook for the global economy."

ANZ analysts, meanwhile, emphasized the uncertainties on the supply side, as threats of oversupply from OPEC+ members such as Libya and Russia continue to loom.

"Russia seemed to [have increased] its production [to] more than the agreed quota in September and Libya is restoring its production. Increasing supplies from OPEC+ [will risk] their rebalancing effort as the market is still grappling with weak demand," ANZ analysts said.