Crude oil futures climb for eighth day as supply outlook remains bullish

Crude oil futures were higher in mid-morning Asian trade May 30, with the ICE Brent crude marker on track for an eighth straight day of gains, as the outlook for oil remained bullish with refined product and gas inventories still tight and the US about to start its summer driving season.

At 10:09 am Singapore time (0209 GMT), the ICE August Brent futures contract was up 94 cents/b (0.81%) from the previous close at $116.50/b, while the NYMEX July light sweet crude contract was 93 cents/b (0.81%) higher at $116/b.

Both crude oil markers were at highs not seen since late-March as investors continued to raise bullish bets on oil as the tightness in supply, particularly for refined products, remained acute.

"Tightness in the refined products market continues to prove supportive for crude oil prices, as healthy refinery margins should see refiners maximize their run rates," said ING analysts Warren Patterson and Wenyu Yao in a May 30 note.

In Asia, the M1-M2 intermonth spread for FOB Singapore 0.5%S Marine fuel oil swaps soared to an all-time high of $61.50/b at the May 27 Asian market close, S&P Global Commodity Insights data showed.

Fuel oil traders in Europe and Singapore have consistently reported the LSFO market to be very tight globally due to a shortage of blending components, S&P Global reported earlier.

Refined product inventories in the US were also hovering near historical lows, with distillate stocks not far from the 17-year low of 104.029 million barrels touched on May 6, US Energy Information Administration data showed.

The tightness was also seen in the gas market with stocks in the US South central storage nearly 14% below the prior five-year average, even as the region faces outsized market risks this summer with strong power burns, narrow summer-to-winter forward price spreads and record LNG demand promising to slow injections.

Latest positioning data from the Intercontinental Exchange showed money managers raising their net longs in ICE Brent crude by 12,639 lots on the week to 197,072 in the week ended May 24, a high not seen since early March. Analysts said that net longs have likely increased even further since then with the recent sustained rise in crude oil prices.

Investors were watching for further developments after Iran on May 27 seized two Greek oil tankers, one loaded with a cargo from Basrah, Iraq, according to Iran's official IRNA news agency.

Media reports indicated that the seizures were in response to Greece taking control of an Iranian oil tanker at the behest of the US.

"Prices jumped late on Friday on reports that Iran's paramilitary Revolutionary Guard said its navy had seize two Greek oil tankers in the Persian Gulf because of unspecified 'violations'," said ANZ Research analysts Brian Martin and Daniel Hynes in a note.

"This raises the specter of further disruptions to oil flows through the Strait of Hormuz, which carries a third of the world's trade," they added.

Dubai crude swaps and intermonth spreads were mostly higher in mid-morning trade in Asia May 30 from the previous close.

The July Dubai swap was pegged at $108.45/b at 10 am Singapore time (0200 GMT), up $1.64/b (1.54%) from the May 27 Asian market close.

The June-July Dubai swap intermonth spread was pegged at $3.01/b at 10 am, up 7 cents/b over the same period, and the July-August intermonth spread was pegged at $2.47/b, unchanged from the previous close.

The July Brent/Dubai EFS was pegged at $11.65/b, up 76 cents/b.