Crude oil futures ease as rally falters on US crude stock build

Crude oil futures were lower in mid-morning Asian trade April 14, as a two-day rally in oil prices lost steam after data showed US crude oil stocks last week posting the biggest build since March 2021.

At 10:43 am Singapore time (0243 GMT), the ICE June Brent futures contract was down 70 cents/b (0.64%) from the previous close at $108.08/b, while the NYMEX May light sweet crude contract fell 85 cents/b (0.82%) at $103.40/b.

US commercial crude stocks climbed 9.38 million barrels to 421.75 million barrels in the week ended April 8, US Energy Information Administration data showed April 13. It was the largest one-week build in US commercial inventories since the week ended March 5, 2021, when stocks jumped 13.8 million barrels.

However, market reaction to the build was tempered by significant drawdowns in key refined product inventories.

Nationwide gasoline stocks declined 3.65 million barrels to 233.14 million barrels, while distillate stocks fell 2.9 million barrels to 111.4 million barrels.

"Despite a surprise build in US inventories, oil remains bid after Tuesday's surge amid easing Shanghai lockdowns and a more pessimistic tone on Ukraine front," said SPI Asset Management Managing Partner Stephen Innes in an April 14 note. "More German parliamentarians are pushing for a total oil ban after witnessing the atrocities firsthand during their visit to Ukraine."

Despite the day's declines, oil prices remained well bid up from April lows. Since hitting an intra-month low of $97.57/b on April 11, the front-month ICE Brent crude contract has added more than $10/b over the subsequent two sessions.

The risks of a EU-wide ban on Russian oil imports remained in focus. Any such move is expected to cause further disruptions to global oil flows and lead to Russian oil exports falling further.

The International Energy Agency said in its monthly oil market report April 13 that Russian oil supply has fallen around 700,000 b/d on average so far in April versus March.

It added that it sees the losses rising to 1.5 million b/d this month as refiners extend run cuts, more buyers avoid barrels and Russian storage fills up.

"The longer this lasts, the more pressure on EU members to act, and having targeted coal in the last round of sanctions, oil could very well be included in the next round," said ING analysts Warren Patterson and Wenyu Yao in an April 13 note.

Dubai crude swaps were higher in mid-morning trade in Asia April 14 from the previous close, though intermonth spreads were mixed.

The June Dubai swap was pegged at $101.97/b at 10 am Singapore time, up $2.53/b (2.54%) from the April 13 Asian market close.

The May-June Dubai swap intermonth spread was pegged at $1.16/b at 10 am, down 1 cent/b over the same period, and the June-July intermonth spread was pegged at $1.18/b, up 4 cents/b.

The June Brent/Dubai EFS was pegged at $5.94/b, up 30 cents/b.