Crude oil futures slip on profit-taking; US oil rig count jumps

Crude oil futures were lower in mid-morning trade in Asia Dec. 17 as investors booked profits after an overnight surge, while analysts maintained that the near-term outlook for oil remains uncertain with the omicron variant threat still present, and the US rig count was seen rising.

At 10:12 am Singapore time (0212 GMT), the ICE February Brent futures contract was down 11 cents/b (0.15%) from the previous close at $74.91/b, while the NYMEX January light sweet crude contract fell 18 cents/b (0.25%) at $72.20/b. Both benchmarks had settled higher by 1.5%-2.1% overnight.

"Crude enjoyed a bit of a relief bump along with other risk assets after the Fed decision and a bullish set of EIA weekly stocks and demand data, but the upward momentum appears to have been exhausted," said Vandana Hari, CEO of Vanda Insights.

"The focus for the oil complex returns to the omicron, where news and data continue to be mixed," Hari added.

Investors have seen few fresh developments or headlines on the omicron variant in the past 24 hours, likely prompting crude to trade in a narrow range for the time being.

On the supply side, US oil-directed rigs rose by 15 to 563 in the week ended Dec. 15 , data from energy analytics and software company Enverus Dec. 16 showed.

Oil demand markers in most of the world's biggest oil consuming countries outside Europe continued to hit post-pandemic highs in the week to Dec. 12, despite ongoing concerns over the impact of the omicron variant on global growth.

Mobility indicators in major Asia and Americas oil-consuming countries improved to within just 2% of pre-COVID-19 levels in the week, according to adjusted data from Google, the highest since the pandemic devastated global oil demand in early 2020.

"The initial cautious optimism that the new variant was not a big threat has been priced in. Crude may now go into a holding pattern until more concrete data propels it further up or down," Hari said.

OCBC Treasury Research analysts said in a note: "We are still expecting Brent to consolidate largely within $70-$75/b in the near term."