Crude oil futures stable to higher amid focus on supply concerns

Crude oil futures were steady to higher in mid-morning Asian trade June 14 as prices were buoyed by a global supply crunch amid a selloff across broader financial markets.

At 10:25 am Singapore time (0225 GMT), the ICE August Brent futures contract was up 8 cents/b (0.07%) from the previous close at $122.35/b, while the NYMEX July light sweet crude contract was 10 cents/b (0.08%) higher at $121.03/b.

The US Energy Information Administration reported late June 13 that exploration and development expenditure in 2021 by 119 companies totaled $244 billion, 28% less than pre-pandemic five-year average.

The news injected a wave of bullish support into prices by serving as a reminder of the continued tightness in the market.

"Even the risk of a little extra supply from Saudi Arabia won't send oil prices sharply lower," OANDA senior market analyst Edward Moya said in a June 14 note.

As OPEC continues to struggle to raise output due to a lack of investment, inventories continue to fall in most major consuming nations.

"These concerns [of supply tightness] are unlikely to ease anytime soon, given uncertainty over how Russian oil supply will evolve, the limited capability of OPEC to increase output significantly and the tight refined products market as we head deeper into summer," ING analysts Warren Patterson and Wenyu Yao said in a June 14 note.

Adding support to the already-tight market, Libya, one of Africa's largest oil producing countries, announced a new wave of shutdowns.

Libya's oil production has fallen 1.1 million b/d from 1.2 million b/d in 2021, Oil Minister Mohamed Oun was quoted as saying June 13, indicating current output was around 100,000 b/d.

A political crisis has led to the shutdown of ports and fields and "almost all the oil and gas activity in the east of Libya is being shut down" Oun was quoted as saying.

Dubai crude swaps and intermonth spreads were mostly higher in mid-morning trade in Asia June 14 from the previous close.

The August Dubai swap was pegged at $110.27/b at 10 am Singapore time (0200 GMT), up $2.23/b (2.06%) from the June 13 Asian market close.

The July-August Dubai swap intermonth spread was pegged at $3.36/b at 10 am, down 3 cents/b over the same period, and the August-September intermonth spread was pegged at $2.50/b, up 6 cents/b.

The August Brent/Dubai EFS was pegged at $11.75/b, up 17 cents/b.