Crude futures rangebound in Asia trade as weak demand outlook counters bullish US jobs report

Singapore — 0250 GMT: Crude oil futures were largely stable in mid-morning trade in Asia Aug. 14 as better-than-expected US jobs data was countered by expectations of a slow global demand recovery as the easing of COVID-19 movement restrictions was impacted by a resurgence of cases in several countries.

At 10:50 am Singapore time (0250 GMT), the ICE Brent October crude futures were up 9 cents/b (0.20%) from the previous settle at $45.05/b, while NYMEX September light sweet crude contract was up 7 cents/b (0.17%) at $42.31/b.

"Crude markets are trading in a tight range around the Brent $45/b mark with little progressive news flow on the macro front," AxiCorp chief global markets strategist Stephen Innes said in a note Aug. 14.

"This week's inventory data was supportive, but the next significant catalyst that the market is focused on could be the US coronavirus stimulus package, which should positively impact the broader economic recovery and, by extension, energy demand," he added.

US Department of Labor data released Aug. 13 showed weekly initial unemployment claims fell to 963,000 in the week ended Aug. 8 from 1.19 million the week before, below 1 million for the first time since mid-March, and beating market expectations of 1.1 million.

This came on the heels of US Energy Information Administration data released Aug. 12 reporting a 4.51 million-barrel draw in US commercial crude inventories, exceeding market expectations for the third consecutive week. Total gasoline and distillate stocks also fell in the week, with distillates notably snapping three consecutive weeks of builds.

However, negotiations between the US administration and Congress for another coronavirus fiscal stimulus package remained at a stalemate, with the Senate joining the House for recess for the rest of August, according to media reports.

The International Energy Agency also lowered its 2020 world oil demand estimate by 140,000 b/d from the month before to 91.95 million b/d in a report published Aug. 13, the first downgrade in the IEA's oil demand forecast in several months and coming a day after OPEC revised down its 2020 forecast by 100,000 b/d to 90.63 million b/d.

"The downbeat view on demand mirrors our view on the market. The easing of restrictions in many parts of the US and Europe has slowed amid a pick-up in infections," the ANZ analysts said in a note Aug. 14.

"Traffic levels have plateaued and are sitting at 50% below 2019 levels. Air traffic is also weak, with commercial flights in July 50% below 2019 levels. With supply also rising over the coming months, we struggle to see Brent crude remaining above $45/b in Q3," the analysts said.