Crude oil futures slightly higher on US stock draw, supply concerns

Crude oil futures were marginally higher during mid-morning trade in Asia Thursday extending the uptrend from the previous trading session amid a bullish report on US crude inventories, while talks about extending waivers on the Iranian sanctions also supported prices.

At 10:53 am Singapore time (0253 GMT), ICE April Brent crude futures were up 22 cents/b (0.33%) from Wednesday’s settle at $67.77/b, while the NYMEX April light sweet crude contract moved up 13 cents/b (0.22%) to $58.39/b.

US crude inventories for the week ended March 8 were down 3.86 million barrels to 449.07 million, according to data released by the US Energy Information Administration on Wednesday.

“Crude oil prices rose sharply after inventories in the US fell significantly more than expected,” ANZ analysts said in a note Thursday.

Analysts surveyed Monday by S&P Global Platts had expected US crude stocks to have increased by 3.3 million barrels for the same period, while analysts quoting data from the American Petroleum Institute reported a build of 2.6 million barrels in US crude inventory last week.

“US crude stocks have been trending broadly sideways this year, as opposed to the usual seasonal increase. The reason for this is that crude imports have been falling sharply, driven by declines from Saudi Arabia and Venezuela,” analysts from Societe Generale said in a note.

US gasoline inventories for the week ended March 8 plunged 4.6 million barrels, while US distillate inventories increased marginally by 383,000 barrels for the same period, EIA data showed. “Market sentiment remains largely positive on tighter global inventories in lieu of OPEC-led supply cuts and geopolitical uncertainties in the current term, ” Phillip Futures’ investment analyst Benjamin Lu said.

Meanwhile, Brian Hook, the US State Department’s special representative for Iran, on Wednesday signaled that the US could extend waivers from sanctions on Iranian crude and product purchases, if current sanctions on Venezuela significantly impact global oil supply and prices.

“[Trump] has made it very clear that we need to have a campaign of maximum economic pressure, but he also doesn’t want to shock oil markets,” Hook said, speaking at the CERAWeek by IHS Markit conference. “He wants to ensure a well-supplied and stable oil market,” he added.

When the US re-imposed sanctions on Iranian crude in November 2018, it also issued waivers to Iran’s top oil buyers, allowing them to continue their imports, while agreeing to some cuts. The waivers, known as “significant reduction exemptions”, were issued to India, China, Italy, Greece, Japan, South Korea, Taiwan and Turkey and are set to expire in early-May.

Hook declined to comment Wednesday if a potential extension of these sanctions would be announced publicly before they are set to expire in May. As of 0253 GMT, the US Dollar Index was up 0.13% at 96.57.