Crude oil futures slip as API data shows build in crude, product stocks

Singapore — 0255 GMT: Crude oil futures fell during mid-morning trade in Asia Dec. 9, as data released from the American Petroleum Institute showed a build in crude and product inventories, with the continued progression of the pandemic also weighing on the market.

At 10:55 am Singapore time (0255 GMT), the ICE Brent February contract was down 12 cents/b (0.25%) from the Dec. 8 settle to $48.72/b, while the January NYMEX light sweet crude contract was down 11 cents/b (0.24%) at $45.49/b. Both markers were directionless on Dec. 8, with the the ICE Brent February contract settling 0.10% higher and the January NYMEX light sweet crude contract settling 0.35% lower.

This morning, however, bearish API data released on Dec. 8 prompted downward price action as it showed that US crude inventories increased 1.141 million barrels for the week ended December 4. This build in crude inventories followed a build of 4.146 million barrels in the week ended Nov. 30 as reported by the API last week, and indicated that fundamentals in the oil markets had not improved.

The API data also showed a dramatic 6.442 million-barrel build in gasoline inventories for the same week, with distillate inventories also rising 2.136 million barrels.

At 10:55 am Singapore time, the NYMEX January RBOB contract was trading 0.17 cents/gal (0.14%) lower than the Dec. 8 settle at $1.2542/gal, with the NYMEX January ULSD contract was down by 0.18 cents/gal (0.13%) at $1.4049/gal.

Stephen Innes, chief global market strategist at Axi, said in a Dec. 9 note that the bearish API data is likely to weigh on the market, adding that pandemic concerns have continued to fester in the market.

"I do not think the API print will help bullish matters today...this is surprising given that stocks are pushing higher on [stimulus hopes], which should be positive for oil, but clearly, COVID-19 concerns continue to sully the landscape," he added.

Analysts at St. George Bank also attributed the pessimism in the market to the pandemic. In a Dec. 9 note, the bank said the fall in the futures markers came as "traders weighed the short-term impact on demand from the high level of global COVID-19 infections verses the medium-term impact of a vaccine and a US stimulus package."

Meanwhile, the oil market, along with broader financial markets, gained some support from the seemingly imminent approval of the Pfizer-BioNTech vaccine by the US Food and Drug Administration. The FDA has already said the vaccine is safe and effective, and an FDA advisory committee is expected to convene on Dec. 10 to discuss the vaccine's Emergency Use Authorization.

"Allaying more of the short-term fears had been news of the UK beginning to administer doses of COVID-19 vaccines and signs that the Pfizer and BioNTech vaccine could be approved for emergency-use authorization in the US on [Dec. 9]," Pan Jingyi, senior market strategist at IG Singapore said in a Dec. 9 note.