Crude oil futures tick lower on profit-taking after overnight surge

Singapore — 0243 GMT: Crude oil futures ticked lower during mid-morning in Asia April 15 on profit-taking, after a bullish report from the US' Energy Information Administration sent prices hurtling nearly 5% higher overnight, while an improved demand forecast from the International Energy Agency provided a further boost to sentiment.

At 10:43 am Singapore time (0243 GMT), the ICE Brent June slipped 3 cents/b (0.04%) lower than the April 13 settle at $66.55/b, while the May NYMEX light sweet crude contract was down 10 cents/b (0.16%) at $63.05/b.

Prices ticked lower this morning as investors locked in profits after a meteoric rally overnight, which propelled the Brent and NYMEX light sweet crude markers to settle 4.57% and 4.94% higher at $66.58/b and $63.15/b, respectively.

The sharp rise was driven by better-than-expected headline numbers from the April 14 EIA report, which showed a 5.89 million-barrel decline in US commercial crude inventories to 492.42 million barrels in the week ended April 9. This draw was more bullish than the 2.9 million-barrel draw forecasted by analysts in a S&P Global Platts survey, and the 3.61 million-barrel draw reported by the American Petroleum Institute on April 13.

The EIA report also showed a 310,000-barrel build in US gasoline inventories, but this build was a source of relief to the market, as it was much smaller than the 5.57 million-barrel build reported by the API. Distillate inventories also declined counter-seasonally by 2.08 million barrels.

Crucially, the report showed an improvement in EIA's implied total refined product supplied metric, a proxy for demand, which climbed 1.09 million b/d to an eight-week high of 20.33 million b/d. Implied gasoline demand jumped 1.8% to 8.94 million b/d, the strongest since August, with implied demand also registering an 8% increase to a 13-week high of 1.36 million b/d.

"The US oil complex once again seems to be moving in the right direction with a sizeable oil draw, a much smaller than expected gasoline build and finally a draw in distillates again. Indeed, this speaks volumes about the US demand recovery and inventories getting siphoned thanks to OPEC+ supply curtailments," Stephen Innes, chief global market strategist at Axi, said in an April 15 note.

Meanwhile, sentiment in the market was further boosted by an upward revision to the IEA's demand outlook, a day after OPEC unveiled an improved forecast. In its April 14 report, the Paris-based agency said that 2021 global oil demand will grow 230,000 b/d faster than previously forecast, expanding 5.7 million b/d to 96.7 million b/d.

"Oil markets fundamentals look decidedly stronger," the IEA said. "The massive overhang in global oil inventories that built up during last year's COVID-19 demand shock is being worked off, vaccine campaigns are gathering pace and the global economy appears to be on a better footing," the IEA reasoned.