Crude oil futures stable to higher amid bullish demand outlook

Crude oil futures were steady to higher in mid-morning trade in Asia Oct. 14 as surging natural gas prices and bullish winter requirements continued to support the demand outlook.

At 10:25 am Singapore time (0225 GMT), the ICE December Brent futures contract was up 9 cents/b (0.11%) from the previous close at $83.27/b, while the NYMEX November light sweet crude contract was 5 cents/b (0.06%) higher at $80.49/b.

"Generally, there are still optimism surrounding oil prices as markets look toward the upcoming winter period to drive further demand. Near-term catalysts may include a pause in the US dollar rally, which declined from its one-year high yesterday, while markets continue to assess the impact of end-users switching to oil products from surging natural gas prices," IG market strategist Yeap Jun Rong told S&P Global Platts Oct. 14.

OPEC+ in its closely-watched monthly market outlook Oct. 13 lowered its estimate for 2021 oil demand growth to 5.8 million b/d from its previous estimate of 5.9 million b/d.

"The slight revision lower was due to lower-than-expected consumption in the first three quarters of the year," ING research analysts said in a note Oct. 14, adding that OPEC still expected to see stronger demand in Q4, particularly given the potential for gas to oil switching.

However ANZ research analysts in an Oct. 14 note pointed out that while the spike in natural gas could boost petroleum use in areas such as power generation, it could also hurt demand in other areas such as refining.

Energy shortages in Europe continue to impact oil markets, with diesel futures in deep backwardation, driven by the switching to gasoil/diesel for power generation.

US crude inventories rose 5.2 million in the week ended Oct. 8, the American Petroleum Institute said in a weekly report late Oct. 13, defying analyst expectations of a 140,000-barrel draw. Gasoline inventories fell 4.6 million in the week and distillate stocks fell 2.7 million barrels, the API said.

"The oil market has edged higher in early morning trading in Asia today despite the API reporting overnight a larger-than-expected increase in US crude oil inventories," ING research analysts said in a note Oct. 14.

The market will be looking to the US Energy Information Administration's weekly stock report due for release later Oct. 14 for more pricing cues.