Crude oil futures were stable during mid-morning trade in Asia Wednesday, with mixed cues failing to provide clear price direction. A surprise draw in US crude inventory and a pick-up in equities markets helped buoy commodities prices, while news of expanded pipeline capacity in the US served to cap gains, market sources said.
At 10:20 am Singapore time (0220 GMT), December ICE Brent crude futures were down 2 cents/b (0.02%) from Tuesday’s settle at $81.39/b, while the NYMEX November light sweet crude contract was 6 cents/b (0.08%) higher at $71.98/b. “American Petroleum Institute figures for the week ended October 12 showed an unexpected 2.1 million b/d decline in US crude oil inventories, even as stocks at the Cushing, Oklahoma delivery point for NYMEX WTI futures increased by another 1.5 million b/d,” OANDA’s head of trading Stephen Innes said.
Analysts surveyed by S&P Global Platts on Monday had expected a 1.88 million-barrel build. More definitive weekly US inventory data is due for release by the US Energy Information Administration later Wednesday. “Geopolitical concerns are continuing to prop up oil prices. US tensions have risen with Saudi Arabia with the disappearance of Saudi journalist Khashoggi and there are also the US sanctions on Iran,” St George Bank senior economist Janu Chan said. The rebound in equities markets overnight was also a factor, analysts said.
“Relief buying in light of rosy earnings expectations buoyed US markets after the bout of steep losses. While the sustainability of the rebound remains a question, the turn in overnight markets nevertheless provides Asian markets with a positive start,” IG market strategist Pan Jingyi said. However, expectations of higher crude production in the US on the back of news of expanded pipeline capacity was providing a ceiling for oil prices, S&P Global Platts reported earlier. “Plains All American Pipeline’s Sunrise project, once fully operational, will provide 500,000 b/d of new crude takeaway capacity from the Permian Basin to Wichita Falls, Texas, where it can move on to the Cushing, Oklahoma hub,” according to the report.