MOSCOW (MRC) -- Crude oil futures continued their uptrend in midmorning Asia trade Sept. 16 after sharp overnight gains on a bullish supply-demand outlook, reported S&P Global.
At 11 am Singapore time (0300 GMT), the ICE November Brent futures contract was up 28 cents/b (0.37%) from the previous close at USD75.74/b while the NYMEX October light sweet crude contract rose 26 cents/b (0.36%) at USD72.87/b.
"Crude oil rallied to a six-week high following another large drawdown in inventories. US stockpiles fell 6,422kbbl last week, according to EIA data. The data follow warnings from the International Energy Agency that supply lost from storms in the Gulf of Mexico would offset gains from OPEC," ANZ analysts said Sept. 16.
Market watchers remain bullish on the outlook for the oil market amid the demand growth estimates for 2022.
The International Energy Agency has raised its 2022 oil demand growth estimate by 100,000 b/d to 3.2 million b/d, a day after OPEC hiked its own forecast of 2022 global demand growth by 900,000 b/d to 4.15 million b/d.
"Sentiment was boosted by the release of OPEC's latest outlook on the oil market, raising its 2022 oil demand forecast by 860kb/d, and now sees demand increasing by 4.15mb/d next year," ANZ analysts said, adding that the stronger outlook was being driven by an optimistic view on Chinese demand, along with positive economic developments supporting stronger demand in Europe.
On the supply side, all eyes were on the US Gulf Coast where recovery efforts continued post Hurricane Ida. Less than 30% of US Gulf of Mexico crude production remained offline Sept. 15 in the aftermath of Hurricane Ida and Tropical Storm Nicholas, although the delayed restoration of onshore facilities continued to slow the return to normalcy in offshore operations.
WTI crude closed up USD2.15/b to settle at USD72.61/b while Brent closed above USD75/b on Sept. 15 for the first time since late July, marking the highest level in six weeks after a US government report showed a bigger-than-expected drop in crude inventories, UOB analysts said.
In inventory news, EIA data showed Sept. 15 that total US commercial crude stocks fell 6.42 million barrels to 417.45 million barrels in the week ended Sept. 10, putting stockpiles 7% behind the five-year average for this time of the year. Total gasoline inventories decreased 1.9 million barrels and were about 4% below the five-year average for this time of the year while distillate fuel inventories decreased 1.7 million barrels in the same period - about 13% below the five-year average.
The draw was largely the result of lingering US Gulf production outages following Hurricane Ida, which made landfall near Port Fourchon, Louisiana, Aug. 29 as a Category 4 storm.
Total US crude output averaged 10.1 million b/d in the week ended Sept. 10, the EIA said, up 100,000 b/d from the week prior but still down 1.4 million b/d from prestorm levels.
As informed earlier, Shell said earlier this month it observed damage from Hurricane Ida to its transfer station West Delta-143 offshore facilities in the Gulf of Mexico. West Delta-143 serves as the transfer station for all production from its assets in the Mars corridor in the Mississippi Canyon area of the Gulf of Mexico to onshore crude terminals. Shell said then it was not yet safe to send personnel offshore to learn the full extent of the damage and estimate the effect on production.
We remind that in late August, 2021, US crude stocks dropped sharply while petroleum products supplied by refiners hit an all-time record despite the rise in coronavirus cases nationwide, the Energy Information Administration said. Crude inventories fell by 7.2 million barrels in the week to Aug. 27 to 425.4 million barrels, compared with analysts' expectations in a Reuters poll for a 3.1 million-barrel drop. Product supplied by refineries, a measure of demand, rose to 22.8 million barrels per day in the most recent week. That's a one-week record, and signals strength in consumption for diesel, gasoline and other fuels by consumers and exporters.
We also remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.