Crude oil futures dip on profit-taking as market awaits fresh drivers

0210 GMT: Crude oil futures were trading lower in mid-morning trade in Asia June 10 on profit-taking after an overnight spike as the market awaited the release of weekly US inventory data for fresh cues on price direction.

At 10:10 am Singapore time, ICE Brent August crude futures were down 42 cents/b (1.02%) from the June 9 settle at $40.76/b, while the NYMEX July light sweet crude contract was 55 cents/b (1.41%) lower at $38.39/b.

"Brent rose 0.9% to $41.18/b yesterday [June 9], but has erased all the gains in early Asian trading... this morning's decline may have been a response to the increasing risk-off sentiment taking hold across global asset markets," OCBC analysts said a note June 10.

A short-term energy outlook released June 9 by the US Energy Information Administration estimated that global oil demand will largely recover in 2021, although demand remains down about 16.5% in the second quarter as multiple countries gradually ease restrictions aimed at containing the spread of COVID-19.

"The slide in Brent most likely fits into the profit-taking category after an extended run for oil with no new fundamental data that would justify a shift in sentiment," AxiCorp chief global markets strategist Stephen Innes said in a June 10 note.

Fresh indications from weekly US oil inventory data are due for release later in the week.

"But for oil prices to move higher, the macro backdrop will need to fall into place as US demand is still lagging... without the return of travel between the world's three largest regions – the US, the EU and China – demand could still be slow to pick up," Innes added.

Bearish sentiment also lingered after Saudi Arabia announced it would not extend an extra 1 million b/d cut beyond the agreed quota period, amid concerns the OPEC+ supply cut accord would not be enough to balance out the sharp decline in oil demand following the COVID-19 pandemic.

The number of COVID-19 cases is also continuing to rise in parts of the US as well as other populous nations including Brazil, Mexico, Russia, India, Indonesia and across much of the Middle East, according to recent media reports.