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London — The crude complex was trending higher on Wednesday morning in early European trading, despite US crude inventory data showing a build in stocks, with the market likely more focused on tightened market fundamentals, analysts said.
At 1110 GMT, ICE October Brent crude futures were up 24 cents/b from Tuesday’s settle at $76.19/b, while the NYMEX October light sweet crude contract showed an increase of 34 cents/b to $68.87/b.
Oil prices were initially lower on Tuesday and during Asian trading hours, following the release of American Petroleum Institute weekly numbers, which showed a small but unexpected build of 38,000 barrels versus the previous week. However, the dip was shortlived, with levels rising from the beginning of European trading hours. The more definitive numbers from the US Energy Information Administration will be published later Wednesday.
According to a survey conducted by S&P Global Platts Monday, analysts were divided on crude inventory levels, with some expecting a drawdown of 3 million barrels or more for the week to August 24, while other expected a slight build.
On average, however, analysts were expecting a 1 million barrel crude draw in US inventories.
“That data doesn’t seem to have done much but we’ll see more official figures later — after last week’s massive drawdown, it will be interesting to see what happens,” said Geordie Wilkes, commodity analyst at Sucden Financial in London.
On the supply side, the approaching deadline for Iranian oil sanctions continues to provide a floor for the market, said analysts.
“The Iranian wildcard continued to keep selling pressures in check. A general consensus is emerging that Iran’s oil shipments are losing momentum at a faster-than-expected clip ahead of November’s deadline,” said Stephen Brennock, in the PVM Fundamental report on Wednesday, adding that further declines are “pencilled in.”
“Analysts are split as to whether there will be supply risk or not — a lot of it will also come down to China and whether they will continue to import from Iran — that is key,” said Sucden’s Wilkes.
However, a lot of those worries are likely to ease following Chinese state-run oil giant Sinopec’s recent assurance on the continual procurement of Iranian crude. Sinopec, the world’s biggest oil buyer and refiner by capacity, said it would not halt purchases of US and Iranian crude despite geopolitical pressures, preferring instead to keep its options open for diversifying supply sources.
As of 1110 GMT, the US Dollar Index was 0.13% higher at 94.84.