Crude futures rebound after overnight plunge, outlook still bearish

Singapore — Crude oil futures were marginally higher in mid-morning trade in Asia Tuesday, rebounding from the sharp decline overnight, although analysts highlighted that the near-term outlook remains bearish.

At 10:35 am Singapore time (0235 GMT), April ICE Brent crude futures rose 34 cents/b (0.62%) from Monday's settle at $54.79/b, while the NYMEX March light sweet crude contract rose 41 cents/b (0.82%) at $50.52/b.

ICE April Brent had settled sharply lower at $54.45/b on Monday, down $2.17/b on the day, and NYMEX March WTI fell $1.45/mt on the day at $50.11/b.

While prices have steadied Tuesday morning after the recent bout of over-selling, analysts said that the expected decline in China's oil demand is likely to weigh on sentiment going forth.

"There is with little doubt that a steep downtrend had taken shape, though prices had also charged into oversold territory," IG's market strategist Pan Jingyi said.

"An OPEC+ move to deepen the supply production cut may be one short-term relief to await here, but the sensitivity to the still widening influence of the coronavirus highlights the downside risks despite the oversold situation," Pan added.

OPEC+ is in the middle of a deal to cut 1.7 million b/d from combined output, up from last year's 1.2 million b/d cut, which runs until the end of March.

The group is expected to slash output a further 500,000 b/d to 1 million b/d, but it is uncertain as to whether this would result in any firm support as the market continues to assess the impact of the coronavirus outbreak.

"OPEC+ is convening on an urgent meeting today to discuss measures for arresting the decline in oil due to the coronavirus," OCBC analysts said Tuesday.

"We think it is highly likely that they will extend the oil production curbs from March to June 2020," the analysts added.

As of 0235 GMT, the US Dollar Index was down 0.02% at 97.680.

--Jeslyn Lerh, jeslyn.lerh@spglobal.com

--Edited by Norazlina Juma'at, norazlina.jumaat@spglobal.com