Crude oil futures were lower during Thursday mid-morning trade in Asia amid a build in US refined product stocks and concerns of global economic growth. At 11:00 am Singapore time (0300 GMT), ICE March Brent crude futures was down 28 cents/b (0.46%) from Wednesday’s settle to $61.04/b, while the NYMEX February light sweet crude contract was also 39 cents/b (0.75%) lower at $51.92/b. Data released late Wednesday by the US Energy Information Administration registered a larger-than-expected 2.68 million fall in US commercial crude inventories in the week ended January 11 to 437.1 million barrels, but a significant build in refined product inventories led the oil complex lower.
US gasoline stocks jumped 7.5 million barrels over the same period to 255.6 million barrels, while distillate stocks rose by 2.97 million barrels to 143 million barrels, the EIA data showed. “The release of the EIA report wasn’t as positive as it first seemed … there was a large build in gasoline inventories. This stoked fears of weak demand in the US,” ANZ analysts said in a note Thursday.
Meanwhile, lingering fears of a slowing global economy also weighed on oil prices, analysts said. “Looking at the broader picture, there are still concerns about the global growth outlook,” St George Bank’s senior economist Janu Chan said. “Persistent weakness in market sentiments and economic fundamentals has capped bullish gains for oil prices despite forecasts for tighter supplies from OPEC-led,” Phillip Futures’ investment analyst Benjamin Lu said. “China, the world’s largest importer of crude oil, has shown increasing signs of economic weakness as PMI and trade export data slumped in December 2018,” Lu added.
Still, some upside potential remains as China’s dependence on imported crude is projected to rise to 72.8% in 2019, from 68.4% last year due to a 6.9% year-on-year growth in apparent petroleum product demand, to 667.92 million mt, according to a report by China National Petroleum Corp.’s Economics and Technology Research Institute. Market participants will keep a lookout next for the Baker Hughes rig count data — an early indicator of future US crude production — to be published Friday.