Crude oil futures rise on bullish API data

Singapore — 0259 GMT: Crude oil futures ticked up during midmorning trade in Asia on Dec. 30 as bullish data from the American Petroleum Institute boosted market sentiment, even as new cases of the mutant coronavirus strain surfaced around the world.

At 10:59 am Singapore time (0259 GMT), the ICE February Brent futures contract was up 19 cents/b (0.37%) from the Dec. 29 settle at $51.28/b while the NYMEX February light sweet crude contract was up 30 cents/b (0.62%) at $48.30/b. Both markers had risen 0.45% and 0.80% on Dec. 29.

The API data showed a 4.785 million-barrel draw in US crude inventories for the week ended Dec. 25. This was larger than the 3.8 million-barrel draw predicted by analysts surveyed by S&P Global Platts.

"Oil prices have remained supported by a weaker US dollar overnight and have finally found a friend in the API inventory report. This morning the American Petroleum Institute (API) reported a much larger draw versus consensus in crude oil inventories for the week ending Dec. 25," said Stephen Innes, chief global market strategist at Axi, in a Dec. 30 note.

The market gleaned further support from decreases in product inventories. US gasoline and distillate inventories fell 718,000 barrels and 1.887 million barrels, respectively, in the week ended Dec. 25. These draws were especially bullish for the market as they were counter to analysts' expectations of a 2.3 million-barrel build and a 1.3 million barrel build in gasoline and distillate inventories, respectively.

At 10:59 am Singapore time, the NYMEX January RBOB contract was trading 0.75 cents/gal (0.54%) higher at $1.3954/gal, and the January ULSD contract was trading 0.31 cents/gal (0.21%) higher at $1.4899/gal.

The market largely ignored news that the US reported its first case of the mutant coronavirus strain that is said to be highly transmissible. This new strain has now been reported in at least 17 countries, according to media reports.

"I do not think traders are concerned about the new strain of the coronavirus as there is insufficient data right now to conclude that it will be immune to the vaccines," David Lennox, resource analyst at Fat Prophet, told Platts on Dec. 30.

"If there were fears that the new strain is going to materially affect energy demand, then we would have seen a much greater fall in oil prices over the past few days," Lennox added.

Hopes over higher direct payments as part of US stimulus measures were fading. Senate majority leader Mitch McConnell introduced a bill that tied direct payments together with a multitude of measures opposed by the Democrats, including the repeal of liability protections for technology companies and the creation of a commission to investigate election fraud. Such a bill is unlikely to pass the Democrat-controlled House of Representatives.