0244 GMT: Crude oil futures ticked lower during the mid-morning trade in Asia July 22 after the US Energy Information Administration's report showed a rise in US crude inventories, although downside in the market was limited on account of robust products data.
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At 10:44 am Singapore time (0244 GMT), the ICE September Brent futures contract was down 28 cents/b (0.39%) from the previous close at $71.95/b, while the NYMEX September light sweet crude contract was down 23 cents/b (0.33%) at $70.07/b.
US crude inventories rose by 2.1 million barrels in the week ended July 16, with the build coming as large increases in stocks at the Gulf Coast and the West Coast overpowered a decline in Cushing, data released by the EIA late July 21 showed. Despite the build, crude inventories remained 7% below the five-year average at 439.7 million barrels.
The rise in crude inventories was attributable partly to a 1.6 million b/d plunge in crude exports to 2.463 million b/d, the lowest export level reported by the EIA since the week ended May 7, with a 875,000 b/d rise in commercial imports also putting upward pressure on inventories.
The crude build shown by the EIA report corroborated a earlier report by the American Petroleum Institute released July 20, which had shown a 806,000-barrel jump in crude inventories, and snapped an eight-week streak of declines.
However, the impact of bearish inventory data on the crude front was somewhat negated by robust products data, as the EIA report showed US gasoline and US distillate inventories falling 100,000 barrels to 236.4 million barrels and 1.3 million barrels to 141 million barrels, respectively, in the week ended July 16.
Total products supplied, EIA's proxy for demand, rose 6.62% to 20.6 million b/d in the week ended July 16, indicating that downstream oil demand remained strong, undeterred by a recent uptrend in COVID-19 infections in the country.
Big oil services provider Baker Hughes expects the demand growth seen in the recent months for oil and natural gas to continue in the second half of 2021 and in 2022.
During the second-quarter earnings call, Baker Hughes CEO Lorenzo Simonelli said that the oil price environment looks "constructive" amid increasing demand and a conservative supply-side response from US shale producers. The producers are likely to maintain the spending discipline they have developed through nearly 18 months of austerity during the pandemic, he said.