Singapore — Crude oil futures saw a modest upswing in mid-morning Asian trade on Thursday, despite a significant drawdown in US crude oil inventories, as US-China trade concerns continue to overshadow sentiment across global markets.
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The July NYMEX light sweet crude futures contract led the rise, pulling up 26 cents/b from Wednesday's settle of $58.81/b to $59.07/b as of 11:00 am Singapore time (0300 GMT).
July ICE Brent futures lagged behind the WTI proxy, moving up 15 cents/b from Wednesday's settle of $69.45/b, at $69.60/b as of 0300 GMT.
The American Petroleum Institute reported a draw of 5.265 million barrels of crude oil from US inventories for the week ending May 24, analysts reports seen by S&P Global Platts showed Thursday morning.
The API released its data late Wednesday.
Despite being the first drawdown on crude stocks in several weeks, upward momentum was capped in oil markets by larger concerns surrounding US-China trade conflicts, analysts said.
"Oil prices are under pressure amid further escalation of the trade conflict between the US and China," Commerzbank said in a note.
Crude oil prices will likely be dampened as part of the larger commodities asset class affected by China's latest move to cut exports of rare-earth materials to the US, they said.
"A risk-off tone dominated the market, with risky asset classes such as commodities coming under pressure - the energy market wasn't spared," ANZ analysts said in a report Thursday morning.
BRENT SPREADS STRENGTHEN ON TIGHTNESS
July ICE Brent crude's premium to other global crude indicators continue to remain around one-year highs however, as fundamentals for the North Sea remain tight, oil traders based in Singapore said on Thursday.
"There is tightness in the North Sea still," a crude oil trader based in Singapore said.
"Urals is still dirty," the trader added, pointing to a critical chloride contamination issue that hit Urals pipelines flowing from Russia into European refineries earlier this month.
ICE Brent's premium to NYMEX light sweet crude touched an 11-month high of $10.97/b earlier this week, Platts data showed. The spread was last wider at $11.37/b on July 6, 2018.
Thursday morning, the spread between the two July contracts was at $10.45/b as of 0230 GMT.
Similarly, Brent's premium to July Dubai swaps -- also known as the Brent/Dubai Exchange Futures for Swaps spread -- was assessed at a one-year high of $4.21/b at the Asian close on Wednesday.
The EFS spread had last been wider on May 15, 2018 at $4.35/b. As of 0230 GMT on Thursday morning, this spread was being pegged at around $4.29/b by market sources in Asia.
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