Crude oil futures edge higher as investor confidence returns

Crude oil futures were higher in midmorning trade in Asia Nov. 19, extending gains from the overnight session after heavy mid-week losses, as investor confidence returned in a market still stuck in deficit.

At 10:15 am Singapore time (0215 GMT), the ICE January Brent futures contract was up 40 cents/b (0.49%) from the previous close at $81.64/b, while the NYMEX December light sweet crude contract rose 37 cents/b (0.47%) at $79.38/b.

"Crude oil edged higher as the market debates the implications of releases from strategic oil reserves. The market also shrugged off concerns that new COVID-related restrictions would hurt demand," said ANZ Research analysts Brian Martin & Daniel Hynes in a note.

Oil markets have been through a rollercoaster few weeks as oil prices struggled to break past their post-pandemic highs of around $86/b reached in late October.

Since then, the ICE Brent and NYMEX light sweet crude benchmarks have slid by close to 10% as a slew of bearish headlines, particularly the threat of a release of oil reserves by major oil consuming economies, pressured prices lower.

Analysts said that traders have mostly priced in the impact of any government action by now.

"WTI crude has dropped almost $9/b since the recent highs as energy traders appear to have mostly priced in the impact of a coordinated SPR release between the US and China," said OANDA senior market analyst Edward Moya.

"The oil market deficit will still remain despite the tapping of reserves and the next big move for prices will most likely depend on the weather," Moya added.

The US oil rig continued to climb as drillers took advantage of oil prices still hovering at multi-year highs despite recent declines.

The domestic oil rig count rose by 16 to 541 for the week ended Nov. 17, energy analytics and software company Enverus said.

The gains were led by the Permian, the largest US producing basin at 4.78 million b/d of oil, according to S&P Global Platts Analytics, as it added 12 rigs for a total of 284, reaching its highest count since mid-April 2020.