Crude oil futures ticked higher during mid-morning trade in Asia Friday, correcting from the slide following a large sell-off this week, despite a build reported in US crude inventories. Growing geopolitical tensions and comments from Russia on its cooperation with OPEC also supported prices, analysts said. At 11:10 am Singapore time (0310 GMT), ICE January Brent crude futures were up 45 cents/b (0.68%) from Thursday’s settle at $67.07/b, while the NYMEX December light sweet crude contract moved 36 cents/b (0.66%) higher at $56.82/b. US Energy Information Administration data released Thursday showed that US crude inventories for the week ended November 9 rose 10.27 million barrels to 442.05 million barrels. This exceeded analyst expectations of a 2.3-million-barrel build and the American Petroleum Institute estimate of a 8.8-million-barrel build for the same period.
Crude prices, however, moved higher despite the build reported in US crude stocks as bullish data on US product inventory and concerns over geopolitical tensions kept prices supported, analysts said. “The EIA report showed a rise of 10.27 million barrels last week, against expectations of 3.2 million barrels. However, investors were encouraged by the falls in product inventories, ” ANZ analysts said in a note. US gasoline inventories for the week ended November 9 were down 1.41 million barrels to 226.61 million barrels, and US distillate stocks fell 3.59 million barrels to 119.26 million barrels, EIA data showed.
“Crude oil selling reaction was muted because distillate supply fell by 3.59 million barrels, driving those inventories at least 8% below the five-year, average,” The PRICE Futures Group analyst Phil Flynn said in a note. “Crude oil prices continued their recovery from last week’s sell-off as geopolitical tension rose,” ANZ analysts said. Media reports showed that a bipartisan group of US senators introduced legislation on Thursday targeting Saudi Arabia over the alleged killing of Saudi journalist Jamal Khashoggi.
“The Trump administration issued financial penalties to 17 Saudi officials in the wake of the kingdom charging 11 people over the death of journalist Jamal Khashoggi,” the ANZ analysts added. Meanwhile, prices also found support from comments made by Russian President Vladimir Putin on Thursday. “It is obvious that we need to cooperate with Saudi Arabia, and we are going to cooperate with Saudi Arabia. OPEC plus has been very positive, and we see that in the market situation,” Putin told reporters in Singapore during a briefing broadcast on Russia 24. “I’m not going to say anything about whether or not we need to limit oil production, we have to be very careful, as every word impacts the state budget,” Putin said.