Crude oil futures were largely stable during mid-morning trade in Asia Tuesday as reports on the availability of emergency stocks eased supply concerns stemming from geopolitical tensions in the Middle East. At 10:50 am Singapore time (0250 GMT), front-month ICE Brent September futures inched up 7 cents/b (0.11%) from Monday’s settle at $63.33/b, while the NYMEX August light sweet crude futures contract moved up 2 cents/b (0.03%) at $56.24/b.
The International Energy Agency emergency oil stocks are sufficient to cover any supply disruption in the Strait of Hormuz for an “extended period,” the agency said Monday, following rising tensions over Middle East shipping. “Oil trimmed gains on a report from the International Energy Agency that said that the IEA is ready to act quickly and decisively in the event of a disruption to ensure that global markets remain adequately supplied, further adding that executive director Fatih Birol has been in talks with IEA member and associate governments as well as other nations that are major oil consumers or producers,” Price Futures Group’s senior market analyst Phil Flynn said in a note.
In a statement, the IEA reiterated that global oil supply had exceeded demand by 900,000 b/d in the first half of the year and commercial stocks in the OECD countries now totaled more than 2.9 billion barrels — higher than the five-year average. Meanwhile, the UK government has advised British ships to avoid the Strait of Hormuz after Iran seized a UK-flagged chemical tanker and briefly detained a VLCC on Friday. The incidents have prompted the US to reassess security for shipping in the Persian Gulf region.
“We will now seek to put together a European-led maritime protection mission to support safe passage of both crew and cargo in this vital region,” Hunt said in a statement to the UK parliament. “We have had constructive discussions with a number of countries in the last 48 hours, and we will discuss later this week the best way to complement this with recent US proposals in this area.” Nevertheless, a bullish report on US inventory helped to support prices, analysts said.
Analysts surveyed Monday by S&P Global Platts were looking for US crude inventory to have declined by 4.4 million barrels for the week ended July 19, but analysts polled were divided on gasoline inventories, with some expecting stock declines last week and others stock builds. On average, analysts were looking for a decline of 1.13 million barrels.