Singapore — Crude oil futures were lower during mid-morning trade in Asia Wednesday ahead of the release of US crude inventory data that was expected to show a build, while supply concerns stemming from looming Iran sanctions and a hurricane in the US Gulf Coast stemmed the decline.
At 10:30 am Singapore time (0230 GMT), the December ICE Brent crude futures were down 18 cents/b (0.21%) from Tuesday's settle at $84.82/b, while the NYMEX November light sweet crude contract was 29 cents/b (0.39%) lower at $74.67/b.
Analysts surveyed Monday by S&P Global Platts expect US crude inventories to have increased by 1.61 million barrels in the week ended October 5. Weekly American Petroleum Institute and the US Energy Information Administration stock reports have been delayed this week by Monday's US Columbus Day holiday.
The bearish analyst expectations were countered to some extent by supply concerns.
A total 670,831 b/d of oil production, accounting for nearly 40% of total Gulf Coast output, was offline Tuesday as operators worked to evacuate crews and shut in production ahead of the approach of Hurricane Michael, the US Bureau of Safety and Environmental Enforcement said.
The storm is expected to make landfall along the Florida Panhandle as a Category 3 major hurricane later Wednesday.
"Prices benefited from production losses in the Gulf of Mexico due to Hurricane Michael," said ANZ analysts in a note Wednesday.
Supply concerns ahead of the Iranian sanctions that snap back next month also continued to inject price volatility, analysts said.
Commerzbank raised its forecast for Brent prices to end 2018 at $85/b from its previous forecast of $70/b due to the emerging supply shortage in the short term.
"The US sanctions will result in a significant decline in Iranian oil exports in the coming months. The oil market thus risks experiencing a supply shortage in the fourth quarter. If this is offset by the other OPEC producers, their spare production capacities will shrink," Comerzbank analysts said in a note.
International Energy Agency head Fatih Birol warned Monday that oil prices were set to enter the "red zone" in Q4, threatening to hit demand growth as the strength of the global economy falters.
With oil prices jumping more than $30/b this year to $85/b and other key energy benchmarks rising sharply, Birol said "expensive energy is back at a time of fragile economic growth."
As of 0230 GMT, the US dollar index was down 0.09% at 95.275.
