OIL FUTURES: Crude prices fall on dollar strength; South Korea's inflation softer than expected

INA-  sources


Crude oil futures were lower in midmorning Asia trade Dec. 3, pressured by a stronger dollar, while South Korea's inflation eased in November, fueling hopes of further rate cuts by the central bank to stimulate demand for Asia's third-largest crude importer.
 
At 11:25 am Singapore time (0325 GMT), the ICE February Brent futures contract was down 3 cents/b (0.04%) from the previous close at $71.80/b while the NYMEX January light sweet crude contract fell 9 cents/b (0.13%) at $68.01/b.
The ICE US Dollar Index was at 106.540 at 10:22 am Singapore time (0222 GMT) on Dec. 3, up 0.11% from the previous close.

"The greenback recaptured its swagger, overturning its previous week's month-end rebalancing-related subdued performance," SPI Asset Management's Managing Partner Stephen Innes said Dec. 3, adding that "[the dollar rode] a bullish wave as President-elect Trump staunchly defended its position as the global reserve currency."

South Korea's November Consumer Price Index rose to 1.5% on the year, compared to 1.3% the month prior and softer than market consensus of 1.7%, latest government data showed Dec. 3.

Analysts had attributed the increase to last year's low base, emphasizing that the downside surprise mainly came from a sharp stabilization of fresh food prices and that the decline was partially offset by higher gas prices as fuel tax cuts were reduced.

Core CPI also rose to 1.9% in November from 1.8% the previous month and was in line with expectations of 1.9%, the data showed.

"Inflation looks like it will be subdued for a considerable time. All this points to further rate cuts by the BoK," ING Regional Head of Research, Robert Carnell, and Senior Economist, Min Joo Kang, said Dec. 3.


US crude stocks to fall
Near-term prices were buoyed on the back of expectations that US crude oil stocks are likely to decline in the week to Nov. 29 amid an expected uptick in refinery demand and stronger exports, analysts surveyed by S&P Global Commodity Insights said late Dec. 2.

US commercial crude stocks likely fell 1.6 million barrels to around 426.8 million barrels, placing inventories at a four-week low and 4.8% behind the five-week average of US Energy Information Administration data, compared with 4.2% the week prior.

More definitive numbers are due for release by the American Petroleum Institute later Dec. 3 and the EIA Dec. 4.

Meanwhile, the upcoming OPEC+ meeting Dec. 5 is in focus, as the alliance faces the dilemma of lifting production cuts by 2025 while walking a fine line between supply and demand, as well as maintaining market share.

"The excess non-OPEC Oil barrels circulation in global supply is stripping any chances OPEC+ has at raising production-cuts, already in place," Phillip Nova's Senior Market Analyst Priyanka Sachdeva said Dec. 3, adding that "OPEC+ is highly likely to defer plans to lift production till 2025, especially when the demand narrative doesn't seem to offer a resolution."


Iraqi production down in Nov
Crude production controlled by the Iraqi federal government, not including volumes from the semi-autonomous Kurdistan region, averaged 3.721 million b/d in November, a senior official with state marketer SOMO said Dec. 2.

The November figure was down 61,000 b/d from 3.782 million b/d in October, according to SOMO data, but Iraq continues to face pressure from fellow OPEC+ producers to comply with its quota and to compensate for overproduction in 2024.

Iraq's OPEC+ quota is 3.905 million b/d, including KRG production.


Dubai crude
Dubai crude swaps and intermonth spreads were lower in midmorning trade in Asia Dec. 3 from the previous close.

The February Dubai swap was pegged at $70.47/b at 11:28 am Singapore time (0328 GMT), down 66 cents/b (0.93%) from the Dec. 2 Asian market close.

The January-February Dubai swap intermonth spread was pegged at 42 cents/b at 11:28 am, down 3 cents/b over the same period, and the February-March intermonth spread was pegged at 24 cents/b, down 2 cents/b.

The February Brent-Dubai exchange of futures for swaps was pegged at $1.28/b, down 10 cents/b.




source: S&P GLOBAL