Singapore — Crude oil futures were lower during mid-morning trade in Asia Wednesday as prices reacted to an unexpected build in US crude stocks reported by the American Petroleum Institute.
At 10:55 am Singapore time (0255 GMT), ICE September Brent crude futures were down 29 cents/b (0.4%) from Tuesday’s settle at $71.87/b, while the NYMEX August light sweet crude contract was 31 cents/b (0.46%) lower at $67.77/b.
US crude stocks rose 629,000 barrels in the week ended June 13, according to reports citing the API data. Analysts surveyed Monday by S&P Global Platts had been looking for US crude stocks to have fallen by 3 million barrels in the period.
The API data also showed that gasoline inventories were up 425,000 barrels, while distillate stocks rose by 1.7 million barrels in the week, sources said.
“The American Petroleum Institute reported US oil stockpiles increased 629,000 barrels last week, suggesting that inventories, amid recent news that Saudi Arabia is increasing its supplies to Asia, can be persuasive drivers to drag oil prices lower into the week,” said OCBC Commodity Economist Barnabas Gan.
Libya’s National Oil Corporation on Tuesday said it has declared force majeure on crude oil exports from its Zawiya port in western Libya following an attack that reduced the Sharara oil field’s output to 125,000 b/d.
“Employee safety is always our first priority. This incident required us to shut down and evacuate a number of stations … for the time being all Sharara production will go to the refinery,” NOC chairman Mustafa Sanalla said in a statement.
Despite this, Libyan oil production is expected to rise to over 800,000 b/d in the next few days as output from the key eastern fields ramps up, sources close to the matter said.
Output at the Waha fields that feed into the Es Sider terminal is expected to hit 300,000 b/d in the coming days, while Agoco-operated fields are producing around 220,000 b/d, sources said.
Elsewhere, Iran has filed a lawsuit against the US in the International Court of Justice claiming the US has violated a 63-year-old treaty by exiting the Iran nuclear deal, a move expected to dramatically impact global oil flows when sanctions return in November.
Since it announced its exit from the Iran deal, US officials have provided mixed signals over whether they will issue exemptions to Iran’s oil customers when sanctions snap back in November.
“The uncertainty on the magnitude and timing of these shifts has muddied the near-term outlook for oil fundamentals,” Goldman Sachs analysts said in a note, referring to the Iran sanctions.
As of 0255 GMT, the US Dollar Index was up 0.06% at 94.775.
–Avantika Ramesh, [email protected]
–Edited by Wendy Wells, [email protected]
Source: S&P Global Platts
