Crude oil futures were lower during mid-morning trade in Asia Thursday despite a draw reported in US crude stocks, as growing supply concerns elsewhere coupled with poor economic outlook continued to exert downward pressure on prices.
At 11:00 am Singapore time (0300 GMT), ICE February Brent crude futures were down 62 cents/b (1.08%) from Wednesday's settle at $56.62/b, while the new front-month NYMEX February light sweet crude contract moved 75 cents/b (1.56%) lower at $47.42/b.
US crude supply declined for a third consecutive week amid continued strong export activity and robust refined product demand, US Energy Information Administration data showed Wednesday.
For the week ended December 14, US crude stocks were down 497,000 barrels to 441.46 million barrels, EIA data showed. Analysts surveyed Monday by S&P Global Platts were looking for stocks to have declined by 3 million barrels for the same period.
Product inventory levels were mixed with the US gasoline inventories increasing by 1.77 million barrels to 230.1 million barrels, and US distillate inventories declining by 4.24 million barrels last week, EIA data showed.
Growing concerns on increasing global supply and poor global economic growth, however, pressured prices lower, analysts said.
Despite a draw reported in US crude inventory, the contraction failed to narrow a budding supply overhang and crude inventories increased their surplus to the five-year average to 6.9%.
This comes at a time where EIA increased its projection for US shale output in January 2019 by 139,000 b/d earlier this week.
"Crude oil prices did give up some of those gains late in the session after the Fed signaled further rate hikes in 2019. This fueled fears that economic growth will suffer," ANZ analysts said in a note.
The US Federal Reserve on Wednesday increased its benchmark interest rate by 25 basis points.
"Oil has lost confidence in the global economy causing one of the most dramatic drops in prices in two years and is igniting concerns of a possible upcoming recession," The PRICE Futures Group analyst Phil Flynn said in a note.
"A day of decline looks set for Asia, matching Wall Street after the Fed meeting conclusion was perceived in a worrying manner by markets, " IG market strategist Pan Jingyi said in a note.
As of 0300 GMT, the US Dollar Index was up 0.04% at 96.485.
Source: PlattsPrevious Next