Crude gains marginally on US inventory drawdown; pandemic weighs

Singapore — 0205 GMT: Crude oil futures traded marginally higher in mid-morning trade in Asia Thursday on easing supply glut concerns, after latest EIA data showed a drawdown in US crude inventories.

At 10:05 am Singapore time (0205 GMT), ICE Brent July crude futures rose 12 cents/b (0.34%) from Wednesday's settle at $35.87/b, while the NYMEX July light sweet crude contract was 5 cents/b (0.15%) higher at $33.54/b.

US commercial crude stocks fell 4.99 million barrels to 526.49 million barrels last week, EIA data showed Wednesday, while crude output slipped to a 19-month low of 11.5 million b/d.

"The EIA draw is an unambiguous reading and provides clear evidence of recovering US demand, a plunging US supply response but most likely a favorable combination of both," AxiCorp chief global markets strategist Stephen Innes said in a note Thursday.

Nonetheless, the small extent of the crude inventory drawdown along with a rise in gasoline inventories capped any significant rally in prices.

Total US gasoline stockpiles climbed 2.83 million barrels during the week ended May 15 to 255.73 million barrels, the data showed. The build snapped three consecutive weekly declines.

"Gasoline stocks rose by 2.8 million barrels, indicating there are still issues with demand," ANZ analysts said in a note Thursday.

Sentiment remained cautiously optimistic even as countries around the world ease lockdown restrictions amid a slowdown in new COVID-19 cases.

"US crude oil production was also relatively unchanged, despite US shale producers continuing to reduce drilling activity," the analysts at ANZ added.

Tensions also continued to simmer between the US and China, after US President Donald Trump once again lashed out at Beijing over the COVID-19 outbreak, media reports showed.