Crude oil futures were marginally lower during mid-morning trade in Asia Tuesday ahead of the release of last week's US inventory data, while expectations of a build among analysts kept the WTI structure in contango.
At 10:30 am Singapore time (0230 GMT), the December ICE Brent crude futures moved 27 cents/b (0.19%) lower from Monday's settle at $79.56/b, while the new front-month NYMEX December light sweet crude contract was down 15 cents/b (0.22%) at $69.21/b.
NYMEX prompt-month WTI was trading 39 cents/b lower than second-month prices during market close, the widest that the prompt-month has been at a discount to second-month since September 2017.
The M1/M2 WTI spread settled at a contango of 19 cents/b on Monday.
Growing US crude inventory over the past couple of weeks has been a strong reason to push the WTI structure into steep contango, said analysts.
According to a poll of analysts surveyed Monday by S&P Global Platts on Monday, US crude inventory is expected to expand by 3.3 million barrels for the week ended October 19.
If confirmed by the more definitive numbers due for release from the US Energy Information Administration later Wednesday, a 3.3 million barrel build would move crude inventories to an 18-week high of around 419.7 million barrels.
Crude stock builds -- particularly at the NYMEX delivery point of Cushing, Oklahama -- have pushed NYMEX crude into contango. Cushing crude inventories at 28.63 million barrels the week ending October 12 were up 6.3 million barrels from September 14.
Product inventories likely declined last week, analysts said, with gasoline stocks expected to be down by 1.5 million barrels and distillate stocks expected to have drawn by 2.45 million barrels.
"I expect crude to be rangebound and broadly track sentiment in the financial markets, until it is the US weekly stocks data time again," Vanda Insights' founder Vandana Hari said.
Preliminary reports on last week's US crude inventory is due for release from the American Petroleum Institute later Tuesday and the official EIA report is due later Wednesday.
Meanwhile, market attention continues to remain on Saudi Arabia, on the issue of the disappearance of journalist Jamal Khashoggi.
"Saudi Arabia confirmed at the weekend that the system-critical journalist Khashoggi died at the Saudi Arabian consulate in Istanbul in early October, " Commerzbank analysts said in a note.
Last week, Saudi Arabia said Khashoggi had been accidentally killed in the Saudi consulate in Istanbul, and subsequently arrested 18 unidentified Saudis and other government officials, amid international pressure.
"The Saudi version of events throws up more questions than it answers, however. Thus the international pressure on the Saudi leadership remains in place, as does the possibility of sanctions, " they added.
"The market appears to think there is little chance of this [sanctions on Saudi oil exports] happening, as the subdued price response illustrates," Commerzbank analysts said.
As of 0230 GMT, the US Dollar Index was unchanged at 95.76.
Read more at S & P Global Platts, <click here>