Crude oil futures mostly steady after roller coaster overnight session

Crude oil futures were mostly steady in mid-morning Asian trade Aug. 11, as prices took a breather after a roller coaster overnight session on a barrage of headlines including a mixed US inventory report and cooling inflation.

At 10:41 am Singapore time (0241 GMT), the ICE October Brent futures contract was down 14 cents/b (0.14%) from the previous close at $97.26/b, while the NYMEX September light sweet crude contract was 9 cents/b (0.1%) lower at $91.84/b.

US Energy Information Administration data released late Aug. 10 showed US implied gasoline demand unexpectedly surging in the week to Aug. 5, contributing to a large draw of 5 million barrels in gasoline stocks over the same period.

The bullishness however was offset by a larger-than-expected build in US commercial crude oil stocks, by 5.5 million barrels to about 432 million barrels in the week, the EIA said. This left stocks 5% below the five-year average, down from 6.7% the week prior.

The mixed-bag inventories report showed that fuel demand is still relatively strong, while the weekly data on commercial crude stocks was impacted in part by rising domestic oil production and temporarily weaker crude exports.

"The EIA crude oil inventory had a lot to take in," said OANDA senior market analyst Edward Moya in a late Aug. 10 note. "Gasoline demand bounced back and that trend could continue as we are still in the peak summer driving season. Crude demand isn't roaring here and as production nears the return to pre-pandemic levels, the oil market isn't [looking] so tight anymore."

US inflation cools

Sentiment in the broader financials markets received a boost after US consumer prices for July came in unchanged on the month, according to the US Labor Department, one of the most significant signs yet that inflation was starting to cool, with oil prices down more than 20% from their June highs.

On the year, however, the CPI remains high with the increase at 8.5%, down from 9.1% for June.

The easing print could see the US Federal Reserve take its foot off the pedal in its battle against inflation through outsized interest rate hikes.

"The slower-than-expected pace of inflation cooled investor expectations of future rate hikes and eased concerns of weaker economic growth," said ANZ Research analysts Brian Martin and Daniel Hynes in a note.

ING analysts, however, noted that core inflation will likely remain elevated with the labor market still tight.

"Ongoing falls in gasoline will mean the headline rate falls further in August, but core inflation is likely to be stickier due to labor costs and will keep the Fed firmly in tightening mode," said ING's chief international economist James Knightley.

The barrage of headlines sent crude oil prices on wild swings throughout the US trading day, with the front-month ICE Brent crude marker falling by more than $2/b in the intra-day Aug. 10 session before reversing losses to finish higher on the day.

Dubai crude swaps were higher in mid-morning trade in Asia Aug. 11 from the previous close, though intermonth spreads were lower.

The October Dubai swap was pegged at $91.13/b at 10 am Singapore time (0200 GMT), up $2.11/b (2.37%) from the Aug. 10 Asian market close.

The September-October Dubai swap intermonth spread was pegged at $2.26/b at 10 am, down 20 cents/b over the same period, and the October-November intermonth spread was pegged at $1.39/b, down 3 cents/b.

The October Brent/Dubai EFS was pegged at $6.08/b, down 59 cents/b.