February 22, 2024 [S&P Global]- Crude oil futures were higher in midmorning Asian trade Feb. 21 amid mounting geopolitical tensions, with investors eyeing the release of the US Federal Reserve’s latest monetary policy minutes later in the global day.
At 10:48 am Singapore time (0248 GMT), the ICE April Brent futures contract was up 26 cents/b (0.32%) from the previous close at $82.60/b, while the NYMEX April light sweet crude contract rose 23 cents/b (0.30%) at $77.27/b.
Oil recovered some ground after sharp losses overnight. The April ICE Brent crude oil futures contract was down $1.22 settling at $82.34/b, while March WTI futures dropped $1.01 to settle at $78.18/b.
Middle East tensions escalated after the US vetoed a draft United Nations Security Council resolution demanding an immediate humanitarian ceasefire in the Israel-Hamas war late Feb. 20, according to local media.
The US continues to push the 15-member body to call for a temporary ceasefire linked to the release of hostages held by Hamas.
“I expect [crude futures] to remain [rangebound] until the Gaza crisis reaches the next turning point, either temporarily defused through a ceasefire or exacerbated with Israel’s onslaught in Rafah,” said Vandana Hari, CEO of Vanda Insights.
All eyes on FOMC minutes
The Federal Open Market Committee meeting minutes, to be released later Feb. 21, will likely shed some light on the US central bank’s rate cut stance.
The likelihood of a reduction in interest rates fell following the publication of consumer price index and producer price index rates at higher-than-expected levels last week.
“While a lot of progress has been made from the core CPI peak of 6.6% in September 2022, it is not yet to the level that would give the Fed much reason to cut rates in the near term,” JPMorgan Chase Commercial Banking’s Head of Research Ginger Chambless said.
Meanwhile, near-term oil prices would remained capped on expectations of a build in US commercial stocks, which likely climbed 4.4 million barrels to around 444 million barrels in the week ended Feb. 16, analysts surveyed by S&P Global Commodity Insights said late Feb. 20.
The expected build was driven by weak refinery runs and firm net imports, marking the fourth consecutive week of gains thereby resulting in inventories to narrow to around 1.6% below the five-year average of US Energy Information Administration data.
More definitive numbers are due for release by the American Petroleum Institute later in the day and the US Energy Information Administration Feb. 22.
Dubai Crude
Dubai crude swaps and intermonth spreads were lower in midmorning trade in Asia Feb. 21 from the previous close.
The April Dubai swap was pegged at $80.82/b at 10 am Singapore time (0200 GMT), down 81 cents/b (0.99%) from the Feb. 20 Asian market close.
The March/April Dubai swap intermonth spread was pegged at 60 cents/b at 10 am, down 2 cents/b over the same period, and the April/May intermonth spread was pegged at 66 cents/b, down 3 cents/b.
The April Brent/Dubai EFS was pegged at $1.76/b, down 10 cents/b.
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