OIL FUTURES: Crude prices rise on temporary supply tightness in physical market

Crude oil futures rose in midmorning trading in Asia on Nov. 13, as short-term supply tightness in the physical market prompted buyers to secure any available cargoes, supported by OPEC's relatively bullish global oil demand forecasts for 2024 and 2025.

Overnight, the NYMEX December WTI settled 8 cents, or 0.12%, higher at $68.12/b, and the ICE January Brent climbed 6 cents, or 0.08%, to settle at $71.89/b, remaining relatively steady in the US open.

At 11.53 am Singapore time (0353 GMT), the ICE January Brent futures contract rose 18 cents/b (0.25%) from the previous close to $72.07/b, while the NYMEX December light sweet crude contract was up 15 cents/b (0.22%) at $68.27/b.

"Crude oil prices edged higher as tightness in the physical market offset bearish sentiment on demand," Brian Martin and Daniel Hynes, research analysts at ANZ, said in a note drafted Nov. 13.

Previously, pessimism weighed on the crude complex, as concerns over the potential imposition of new US tariffs on China compounded disappointment over Beijing's recent stimulus measures, which failed to boost sentiment in the flatlining economy of the world's largest crude importer.

"Buyers in the physical market have been particularly active, with any available cargoes being snapped up quickly. This has supported the Dated Brent benchmark, despite futures prices in WTI suggesting an oil glut is looming," Martin and Hynes said.

OPEC trims global oil demand forecasts

OPEC trimmed its estimate for global oil demand growth in 2024 and 2025 for the fourth time in as many months, days after punting plans to start tapering 2.2 million b/d of voluntary cuts into January, although the bloc remains far more bullish than many other forecasters.

In its closely watched monthly oil market report released Nov. 12, OPEC projected global demand to grow by 1.82 million b/d in 2024 -- down 110,000 b/d month over month and 430,000 b/d lower than its July forecast -- to 104.03 million b/d.

Meanwhile, OPEC forecast that global oil consumption will rise by 1.54 million b/d in 2025, down from its October estimate of 1.64 million b/d.

Although OPEC has revised its demand forecasts downward in recent months, it remains significantly more optimistic than other forecasters, with the estimated "call" on OPEC+ crude -- the quantity the alliance must produce to balance the market -- well above current production levels.

"[OPEC] attributed the change to weakening demand in China and India. Nevertheless, its outlook remains relatively bullish compared with other major agencies, such as the IEA [International Energy Agency]. In some cases, its demand growth forecast is almost double the rate," Martin and Hynes said.

Trump's Middle East policy under focus

Meanwhile, attention has shifted back to the ongoing conflict in the Middle East as the global market waits for President-elect Donald Trump's new cabinet appointments for his second term in the Oval Office.

President-elect Donald Trump's Middle East policy remains uncertain, but former US officials said Nov. 12 that his penchant for deal-making and stated opposition to international conflict could help ease tensions with Iran.

"Trump is inherently unpredictable, and his first term is no indication for his second term," Ryan Cocker, former US Ambassador to Syria, Iraq, Pakistan, Kuwait, Afghanistan and Lebanon, said. "His Middle East agenda remains a mystery, possibly even to him at the moment."

"Newly appointed Secretary of State Marco Rubio, known for his hardline stance on Iran and support for Israel, could bring a new layer of geopolitical tension to the energy markets," SPI Asset Management Managing Partner Stephen Innes said Nov. 13.

As geopolitical tensions in the Middle East potentially simmer, the likelihood of supply disruptions may rise, providing some support to the crude complex.

"Heightened pressure on Iran could lead to supply disruptions, ramping up the stakes for oil traders navigating this volatile environment," Innes said.

Dubai swaps

Dubai crude swaps and intermonth spreads edged higher in midmorning trading in Asia on Nov. 13 from the previous close.

The January Dubai swap was pegged at $70.58/b at 10 am Singapore time (0200 GMT), up 3 cents/b (0.04%) from the Nov. 12 Asian market close.

The December-January Dubai swap intermonth spread widened 4 cents/b to 29 cents/b at 10 am over the same period, and the January-February intermonth spread was pegged at 22 cents/b, widening 3 cents/b.

The January Brent/Dubai exchange of futures for swaps was pegged at $1.43/b, stable from the previous Asian close.