OIL FUTURES: Crude down on supply overhang, weak US manufacturing data

Crude oil futures were lower in midafternoon Asian trade Jan. 6, as the market remains well supplied with barrels despite Russian attacks on Ukrainian energy infrastructure, with pressure from bearish US macroeconomic data.

At 3:40 pm Singapore time (0740 GMT), the ICE March Brent futures contract was down by 28 cents/b, (0.45%) from the previous close at $61.48/b, while the NYMEX February light sweet crude contract was down by 32 cents/b (0.55%) from the previous close at $58.00/b.

Russia launched several missiles at Kharkiv, Ukraine, on Jan. 5, damaging energy infrastructure in the country's second-largest city, Kharkiv's Mayor Ihor Terekhov reported on Telegram.

"Despite headlines about Russian missile strikes damaging energy infrastructure in Ukraine, we witnessed a price reversal this morning, underlining that traders are less inclined to price in long-lasting physical supply disruptions when the market is already heavy," Priyanka Sachdeva, senior market analyst from Phillip Nova, said.

The latest data from the International Energy Agency and US Energy Information Administration point toward global crude oil supplies outpacing consumption growth.

Meanwhile, the market remains skeptical about the impact of the US appropriation of Venezuelan oil on the current supply balance.

"The hesitation comes from the fact that Venezuela's vast oil fields suffer from years of underinvestment and aging technology, which prevents the country from pumping and exporting oil at scale. Despite sitting on the world's largest oil reserves, the country exports less than 1% of global supply," Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said.

The latest US macroeconomic data continued to pressure crude oil futures prices. The ISM Manufacturing purchasing manager index fell for a third consecutive month to 47.9 in December 2025, compared to 48.2 in November, data from the Institute for Supply Management showed late Jan. 5.

This marks the 10th consecutive contraction of the manufacturing sector, and fell below expected levels at 48.3. Taken as a proxy for crude oil consumption, demand for crude oil appears muted.

Meanwhile, US crude oil inventories likely declined in the week to Jan. 2, analysts surveyed by Platts, part of S&P Global Energy, said Jan. 5 against a backdrop of rising refinery demand.

Commercial crude stocks likely declined by 300,000 barrels, analysts said, putting them at a nine-week low of 422.6 million barrels. The counter-seasonal draw would leave stocks 7.9 million barrels behind year-ago levels and widen the deficit to the five-year average of EIA data to 3.2% from 2.6% the week prior.

"A rapid drawdown in inventories suggested companies are relying on existing stockpiles to meet softening demand. That raises an important question: what happens to inflation when inventories are rebuilt at tariff-boosted prices? For now, investors remain comfortable that inflation will stay in check -- as reflected in falling US two-year yields," Swissquote Bank's senior analyst added.

Dubai crude

Dubai crude swaps and intermonth spreads were higher in the midafternoon Asian trading Jan. 6 from the previous close.

The March Dubai swap was pegged at $60.37/b at 3:00 PM Singapore time (0700 GMT), up by $1.81/b (3.09%) from the previous Asian market close.

The February-March Dubai swap intermonth spread was pegged at minus 2 cents/b, wider by 9 cents/b over the same period, and the March-April Dubai swap intermonth spread was pegged at 1 cent/b, wider by 11 cents/b over the same period.

The March Brent-Dubai exchange of futures for swaps was pegged at $1.23/b, up by 3 cents/b over the same period.