Crude oil prices continue to trade soft, with ICE Brent trading at US$72.7/bbl as of writing and NYMEX WTI trading at around US$68.6/bbl. The Brent forward curve continues to tighten, with the Jan-Feb spread increasing to a 6-month high backwardation of US$0.55/bbl today compared to a recent low of US$0.18/bbl on 11 November. The market expects the crude oil market balance to ease further over the coming months as OPEC delays output hike plans, ING’s commodity analysts Ewa Manthey and Warren Patterson note.

The crude oil market balance to ease further

“Weekly data from the Energy Information Administration (EIA) shows that crude oil inventory in the US dropped by 1.8m barrels last week, a larger draw than market expectations of around 0.5m barrels and mainly due to lower imports. Crude oil imports fell by 1.6m bbls/d last week to 6.1m bbls/d as imports from Latin America softened. Exports strengthened by 0.3m bbls/d to 4.7m bbls/d.”

“For refined products, gasoline inventory increased by 3.3m barrels to 212.2m barrels while distillate inventory increased by 0.4m barrels to 114.8m barrels on higher refinery output. Refinery utilization increased 0.3% to 90.5% over the last week. Refinery utilization in the US over the past few weeks remains high when compared to seasonal averages.”