Singapore—0232 GMT: Crude oil futures ticked higher during the mid-morning trade in Asia, with optimism over large draws in US product inventories trickling down into markets otherwise cautious ahead of the OPEC+ meeting.
At 10:32 am Singapore time (0232 GMT), the ICE Brent May contract was up by 19 cents/b (0.30%) from the March 3 settle to $64.26/b, while the April NYMEX light sweet crude contract was up by 10 cents/b (0.16%) to $61.38/b.Data released from the Energy Information Administration spurred some optimism in the market as it showed massive declines in US product inventories.
According to the data, US gasoline inventories registered the largest-ever one-week draw reported by EIA in records dating back to January 1992, plummeting 13.62 million barrels to 243.47 million barrel during the week ended Feb. 26. Distillate inventories also recorded their largest draw since January 2003, plunging 9.72 million barrels to 143 million barrels last week.
The bullish data for downstream products took away some attention from the largest-ever one-week build in US commercial inventories, which rose 21.56 million barrels to 484.61 million barrels last week.
"Gasoline demand was the star of the show with a very welcome and colossal draw as the weather improved and road traffic picked up significantly," Stephen Innes, chief global market strategist at Axi, said in a March 4 note.
Meanwhile, the market eagerly awaited the March 4 OPEC+ meeting, after the March 3 OPEC+ Joint Ministerial Monitoring Committee meeting concluded with no recommendation on April crude output levels. Delegates to the meeting said that Saudi Arabia, citing the tenuous nature of oil's recovery, wants to limit any rise in production quotas, while other coalition members want to pump more crude in order to take advantage of oil's bull run.
While there has been speculation in the market that Saudi Arabia would choose not to continue with its unilateral 1 million b/d output cut, S&P Global Platts Analytics said in a recent note that strong OPEC+ quota compliance may convince Saudi Arabia to ease this extra cut in a more phased manner, thereby ensuring that the market remains supported by constrained supply.
"A more gradual rollback of Saudi Arabia's 1 million b/d cut remains a distinct possibility, which could result in tighter markets and signal higher prices as [April loadings] will be needed for increased summer refinery runs," Platts Analytics said.
ANZ research, in a March 3 report, said that while the crude oil futures market has rallied due to progress on the pandemic and US stimulus fronts, the sentiment in the physical markets remains lackluster, and that a full recovery for oil still looks some way off.
"We expect OPEC+ to increase output by 750kb/d in April. This assumes a 500kb/d increase across the group, coupled with a 250kb/d increase from Saudi Arabia," they said.
