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Crude oil futures steady as EIA reports stock draw in line with API

0214 GMT: Crude oil futures were steady during the mid-morning trade in Asia June 24 on unchanged fundamentals, with the US Energy Information Administration's report of a draw in US crude inventories coming in line with earlier data released by the American Petroleum Institute.

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At 10:14 am Singapore time (0214 GMT), the ICE August Brent futures contract was down 4 cents/b (0.05%) from the previous settle at $75.15/b while the NYMEX August light sweet crude contract was down 3 cents/b (0.04%) at $73.05/b.

EIA data released late June 23 showed US crude inventories falling by 7.61 million barrels to 459.06 million barrels in the week ended June 18. The draw, however, did not spur a rally during Asian trading, as it offered little new information, merely corroborating the American Petroleum Institute's earlier report of a 7.2 million-barrel draw.

The data also showed distillate stockpiles climbing 1.75 million barrels to 137.95 million barrels in the same period, with the build more bearish than the build of 992,000 barrels estimated by API data.

The EIA data, however, differed from the API in its estimate of the change in the US gasoline inventories. The EIA data showed an unexpected fall in US gasoline inventories of 2.93 million barrels to 240.05 million barrels in the week ended June 18. It was hence more bullish in this aspect than the API data, which had shown a 959,000-barrel rise in gasoline inventories in the same period.

The EIA data release feeds right into the demand recovery narrative that underpinned the recent rally in oil prices. Total products supplied, EIA's proxy for demand, ticked up nearly 1% to 20.75 million b/d in the week to June 18 and the closely watched gasoline products supplied metric rose commensurately to 9.44 million b/d, testing highs last seen in February 2020 prior to the first wave of pandemic lockdowns.

The uptick in gasoline demand comes as more Americans take to the road amid easing mobility restrictions and rising vaccination rates. Apple Mobility data showed that US driving activity jumped six percentage points to a fresh record of around 164% of the index's January 2020 baseline in the week ended June 18.

Analysts said that in addition to strong demand, leaner supply in the US was also offering support to the market.

"Domestic production actually fell last week to 11.1 million b/d as US shale producers remain reluctant to boost output. A Federal Reserve Bank of Dallas survey of oil and gas executives showed that more than 75% expect a supply shortfall over the next 2-4 years," ANZ analysts said in a June 24 note.

Moving away from the US market, oil demand in Europe and key economies in Asia is also expected to strengthen, as these regions emerge from the shadow of pandemic lockdowns.

Against this backdrop, the OPEC+ members will meet on July 1, with analysts expecting the producer group to raise production in order to take advantage of the rosy demand outlook and secure a larger market share.