Singapore — Crude oil futures were higher during mid-morning trade in Asia Wednesday, amid a draw reported in US crude stocks last week and ongoing geopolitical risks in the critical Strait of Hormuz that was causing supply concerns.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
At 10:25 am Singapore time (0225 GMT), front-month ICE Brent September futures moved 48 cents/b (0.74%) higher from Tuesday's settle to $65.20/b, while the NYMEX September light sweet crude futures contract was 38 cents/b (0.65%) higher at $58.43/b.
According to analyst reports quoting data released by the American Petroleum Institute Tuesday, US crude stocks for the week ended July 26 was down 6 million barrels.
Analysts surveyed Monday by S&P Global Platts were expecting US crude stocks for the same period to have dropped by 3.9 million barrels.
Definitive numbers on last week's US inventory data is due for release from the US Energy Information Administration later Wednesday.
Meanwhile, the United Kingdom has invited military representatives from the US, France and other European countries to a meeting in Bahrain on Wednesday on safeguarding shipping through the Strait of Hormuz, according to media reports.
"Tension in the Middle East remains high, with Iran and France starting discussions about the nuclear deal. Iran had warned it had exceeded enrichment levels under the agreement earlier this month," ANZ analysts said in a note Wednesday.
Shipping risks through the Strait of Hormuz have climbed since Iran seized a UK-flagged chemical tanker and briefly detained a UK-owned VLCC on July 19. The incident followed tanker attacks in May and June.
The US military and Department of State have for weeks been trying to build a coalition called Operation Sentinel to share the burden of protecting oil and other commercial shipments through the Strait of Hormuz.
US President Donald Trump has, however, questioned the US' role in policing the oil chokepoint, arguing the expensive military presence benefits "very rich" Middle Eastern exporters and Asian importers when the US no longer needs the oil.
Iran, on the other hand, is planning a joint military drill in the Strait of Hormuz, Commander of the Iranian Navy, Rear Admiral Hossein Khanzadi, told state news agency IRNA earlier this week.
The Iranian armed forces had signed a contract for the drills with the Russian Ministry of Defense, but did not say when the drills will be carried out, Khanzadi said.
"A bullish crude and gasoline draw from API on top of a report that Iran and Russia are going to do joint military drills in the Strait of Hormuz. Shorts may have to run for cover," Price Futures Group senior market analyst Phil Flynn said.
Meanwhile, market participants would also be looking out for a decision on US interest rates by the Federal Open Market Committee, and comments from the ongoing US-China trade talks.
As of 0225 GMT, the US Dollar Index was unchanged at 97.83.
--Avantika Ramesh, firstname.lastname@example.org
--Edited by Geetha Narayanasamy, email@example.com