Oil futures: Prices drift lower despite US crude inventory draw
Quantum Commodity Intelligence – Crude oil futures Thursday resumed downwards trend despite US data revealing a larger-than-expected draw on crude stocks last week, with markets still in the grip of demand growth and inflationary concerns.
Front-month Jul24 ICE Brent futures were trading at $82.04/b (1850 GMT), compared to Wednesday's settle of $83.60/b, while the more-liquid Aug24 contract was trading at $82.01/b.
At the same time Jul24 NYMEX WTI was trading at $78.01/b, versus Wednesday's settle of $79.23/b.
Markets had initially steadied after data from the American Petroleum Institute revealed crude stockpiles dropped a weighty 6.5 million barrels last week, outpacing expectations for a smaller draw of around 2 million barrels.
The key Cushing storage hub, the delivery point for the NYMEX WTI futures contract, dropped a steep 1.7 million barrels after posting a 10-month high of over 36 million barrels last week.
Weekly EIA figures released later Thursday had US commercial crude oil inventories falling by a slightly more modest 4.2 million barrels, but leaving benchmarks in the red for the day after gasoline stocks swelled by 2 million barrels in the week to 24 May.
Worries over inflation largely stalled the solid late-month rally on Wednesday, with prices dropping nearly $3/b from the peaks which saw Brent briefly top $85/b in the previous session. The font-month spread also narrowed to a multi-month low of under +$0.10/b.
An uncertain outlook over demand growth also wobbled markets midweek.
"There is much uncertainty around demand as the northern hemisphere heads into the traditional driving season. While US holiday trips are expected to hit a post-COVID high, improved fuel efficiency and EVs could see oil demand remain soft," said ANZ commodity strategist Daniel Hynes, although added this may be in part offset by rising air travel.
Meanwhile, Wednesday's German inflation at a y-o-y 2.8% came in above expectations and while the ECB is expected to go ahead with a first rate cut at its June meeting, higher inflation could scupper hopes for back-to-back cuts.
