Singapore — 0314 GMT: Crude oil futures slipped during mid-morning trade in Asia Sept. 24 despite bullish data from the US Energy Information Administration, as traders reconsidered their exposure to risky oil amid impending economic distress.
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At 11.14 am Singapore time (0314 GMT), ICE Brent November crude futures were trading at $41.44/b, down 33 cents/b (0.79%) from the Sept. 23 settle, while the NYMEX November light sweet crude contract was at $39.51/b, down 42 cents/b (1.05%).
This decline in oil futures comes despite bullish data from the EIA, which reported that US commercial crude stocks fell 1.64 million barrels to 494.41 million barrels in the week ended Sept. 18, with lower production and higher exports offsetting weak refinery demand.
The EIA data also showed that in the week ended Sept. 18, US gasoline inventories declined 4.03 million barrels to 227.5 million barrels and are just 0.9% above the five-year average, but during the Asian trade session the RBOB futures for October dipped 1 cent/gal (-0.77%) from the overnight settle to trade at $1.172/gal.
Analysts attributed the downtrend in the oil market to concerns over the pace of economic recovery after the resurgence of COVID-19 during the winter months threatened renewed lockdown restrictions and reduced oil demand.
Analysts from ANZ said in a Sept. 24 note: "The market continues to fret about the outlook for demand amid a resurgence in COVID-19 cases...this is borne out in Europe, where rising infection numbers appear to be restricting travel."
These concerns only heightened after the chairman of the Federal Reserve, Jay Powell, warned that the US' economic recovery may come to a halt without additional fiscal stimulus.
Stephen Innes, chief global markets strategist at AXI, said in a Sept. 24 note that "[Powell's economic warning and call for more stimulus] brought the oil price recovery to a screeching halt with nervous investors seeking out the US dollar's safety. Indeed, the stronger US dollar is the clearest signal that traders have little to no interest in holding risk, especially in growth assets like oil."