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Crude oil futures steady-to-higher in Asia as surging gas prices to support bullish demand outlook

October 14/2021

MOSCOW (MRC) -- Crude oil futures were steady to higher in mid-morning trade in Asia Oct. 14 as surging natural gas prices and bullish winter requirements continued to support the demand outlook, reported S&P Global.

At 10:25 am Singapore time (0225 GMT), the ICE December Brent futures contract was up 9 cents/b (0.11%) from the previous close at USD83.27/b, while the NYMEX November light sweet crude contract was 5 cents/b (0.06%) higher at USD80.49/b.

"Generally, there are still optimism surrounding oil prices as markets look toward the upcoming winter period to drive further demand. Near-term catalysts may include a pause in the US dollar rally, which declined from its one-year high yesterday, while markets continue to assess the impact of end-users switching to oil products from surging natural gas prices," IG market strategist Yeap Jun Rong told S&P Global Oct. 14.

OPEC+ in its closely-watched monthly market outlook Oct. 13 lowered its estimate for 2021 oil demand growth to 5.8 million b/d from its previous estimate of 5.9 million b/d.

"The slight revision lower was due to lower-than-expected consumption in the first three quarters of the year," ING research analysts said in a note Oct. 14, adding that OPEC still expected to see stronger demand in Q4, particularly given the potential for gas to oil switching.

However ANZ research analysts in an Oct. 14 note pointed out that while the spike in natural gas could boost petroleum use in areas such as power generation, it could also hurt demand in other areas such as refining.

Energy shortages in Europe continue to impact oil markets, with diesel futures in deep backwardation, driven by the switching to gasoil/diesel for power generation.

US crude inventories rose 5.2 million in the week ended Oct. 8, the American Petroleum Institute said in a weekly report late Oct. 13, defying analyst expectations of a 140,000-barrel draw. Gasoline inventories fell 4.6 million in the week and distillate stocks fell 2.7 million barrels, the API said.

As MRC informed before, US commercial crude stocks fell 3.48 million barrels to 413.96 million barrels in the week ended Sept. 17, to more than 8% below the five-year average, Energy Information Administration data showed. Stocks were last lower Oct. 5, 2018.

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.
Author:Margaret Volkova
Tags:Asia, crude and gaz condensate, gas processing, petrochemistry, USA.
Category:General News
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