Crude oil futures edge higher on bullish US stocks data, shrug off stimulus wrangling

Singapore — 0242 GMT: Crude oil futures edged higher during mid-morning trade in Asia Dec. 24 on positive crude stocks data from the US Energy Information Administration, and shrugging off uncertainty over the passing of a US stimulus package.

At 10:42 am Singapore time (0242 GMT), the ICE Brent February contract was up 14 cents/b (0.27%) from the Dec. 23 settle at $50.34/b, while the February NYMEX light sweet crude contract was up 11 cents/b (0.23%) at $48.23/b. The markers had risen 2.24% and 2.34% respectively on Dec. 23.

The uptrend continued into early trade in Asia Dec. 24, fueled by the release of EIA data showing that US crude inventories fell 570,000 barrels in the week ended Dec. 18 to 499.53 million barrels. Although this was short of analyst expectations of around a 4.7 million-barrel draw, it was more bullish than the American Petroleum Institute's Dec. 22 estimate of a 2.7 million-barrel build in the week.

The EIA report also suggested fundamentals in downstream markets had improved, with US gasoline stocks falling 1.13 million barrels to 237.75 million barrels and distillate stocks falling 2.33 million barrels to 148.93 million barrels in the week. Analysts in contrast had expected a 1.4 million-barrel rise in gasoline stocks and a 1.1 million-barrel fall in distillate stocks.

According to the EIA data, implied demand for gasoline rose 422,000 b/d in the week ended Dec. 18 to 7.9 million b/d, in line with seasonal norms and as Apple Mobility data showed that US driving activity was at a four-week high. Implied distillate demand rose 172,000 b/d to 4.17 million b/d.

"The EIA data is definitely providing some icing to the cake, and there are some other factors at play here as well, including some weakness in the dollar and a slight improvement in US jobless claims numbers " Jeffrey Halley, senior market analyst at OANDA, told S&P Global Platts on Dec. 24.

The political flip-flop over US fiscal relief measures was continuing after US President Donald Trump demanded changes to the Congress-approved stimulus package, including increasing the package's "ridiculously low $600" direct payments.

However, analysts said oil market participants still expect a stimulus deal to eventually be squeezed out, and were largely ignoring the political wrangling.

"The market seems to have largely overlooked President Donald Trump's rejection of the stimulus package as, despite all the to and fro, the expectation is that a stimulus deal will still emerge and there is a possibility that this deal could be even bigger," Halley said.