Oil up on bullish US inventory data, OPEC cuts

Singapore — 0608 GMT: Crude oil futures were higher during mid-afternoon trade in Asia Thursday on positive US inventory data from the American Petroleum Institute coupled with rising optimism from the OPEC output cuts.

At 2:08 pm in Singapore (0608 GMT), the front-month ICE Brent March crude futures were up 23 cents/b (0.35%) from Tuesday's settle at $66.23/b, while the front-month NYMEX February light sweet crude futures contract was 15 cents/b (0.25%) higher at $61.21/b.

According to analysts' reports quoting the latest inventory report from the API, US crude inventories fell 7.8 million barrels for the week ended December 27, which more than doubled analysts' expectations of a 3.1 million barrels draw over the same period, a survey conducted by S&P Global Platts on Monday showed.

Meanwhile, total US gasoline stocks are expected to have added 3.7 million barrels, while distillate stocks are expected to rise 3.2 million barrels over the same period, the survey data showed.

Market participants will await the more definitive inventory data from the US Energy Information Administration, due to be published later Friday. Meanwhile, optimism from the OPEC output cuts also helped firm market sentiment, analysts said.

"Global oil benchmarks remain supported however as market fundamentals are projecting for a small supply-deficit over sharp production cuts by OPEC+ [in the first quarter of 2020]," said Benjamin Lu, investment analyst at Phillip Futures.

"OPEC+ has affirmed their commitment for the rebalancing of oil markets with production restraints...A renewal in global risk appetites will keep oil prices trending within the bullish channel for 1Q 2020," Lu added.

In addition, the trade truce between the US and China was also supportive of oil prices.

"President Trump stated that the China deal is likely to be signed on January 15 and that P2 discussion would commence shortly after that. All of which should provide further impetus for traders to start the year off piling into the consensus long growth rebound trades," Stephen Innes, AxiTrader's chief Asia market strategist, wrote in a note Thursday.

As of 0608 GMT, the US Dollar Index was up 0.11% at 96.265.

--Ng Jing Zhi, jz.ng@spglobal.com

--Edited by Manish Parashar, manishparashar@spglobal.com