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Crude oil futures rise as EIA data shows unexpected crude draw

Singapore — 0221 GMT: Crude oil futures rose during the mid-morning trade in Asia Nov. 26, extending overnight gains, as the Energy Information Administration data showed a surprise draw in US commercial crude inventories.

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At 10:21 am Singapore time (0221 GMT), ICE Brent January crude futures were up 36 cents/b (0.74%) from the Nov. 25 settle to $48.97/b, while the NYMEX January light sweet crude contract was up 26 cents/b (0.57%) at $45.97/b.

Both the ICE Brent January contract and the WTI January contract had jumped 1.57% and 1.78% on Nov. 25 to settle at $48.61/b and $45.71/b respectively, as the US dollar tested multi-year lows and optimism over the recently developed vaccines reached a crescendo.

Following that, in the Asian trading session, the market also received a boost from Nov. 25 EIA data, which showed that in the week ended Nov. 20, the total commercial crude inventories had declined 750,000 barrels to 488.72 million barrels. This counter-seasonal draw left inventories 6.2% above the five-year average, the lowest overhang since early April.

The draw improved sentiment as the market was generally expecting the EIA data to show another build, since data from the American Petroleum Institute released Nov. 24 had shown that crude inventories had risen substantially by 3.8 million barrels in the week ended Nov. 20. Analysts surveyed by S&P Global Platts, however, had expected the EIA data to show a 1.3 million barrel draw in the same week.

The EIA data also showed a 2.18 million-barrel build in US gasoline inventories in the week ended Nov. 20 to 230.15 million barrels, a 10-week high, and a 1.44 million barrel draw in distillate inventories to 142.63 million barrels. Total product supplied, EIA's proxy for demand, fell 410,000 b/d to 19.16 million b/d, with implied gasoline demand taking a 130,000 b/d hit at 8.13 million b/d, the lowest since the week ended June 12 and nearly 12% behind year-ago levels.

At 10:21 am Singapore time, the NYMEX December RBOB contract was trading 0.02 cent/gal (0.02%) higher than the Nov. 25 settle at $1.2877/gal and the NYMEX December ULSD contract was up by 0.19 cent/gal (0.14%) at $1.3885/gal.

However, these indications of unimproved fundamentals in the downstream market did little to stem the market's vaccine-driven enthusiasm, with ANZ analysts saying in a Nov. 26 note: "The market continues to view the progress of vaccines as supportive of demand over the short to medium term."

"The front of the forward curve continues to move into backwardation (where near term prices are higher than longer date futures), helping attract passive flows into the market and aiding further prices rallies," they added.