Crude futures edge higher in Asia trade from 14-month low ahead of OPEC+ meet

New York — 0200 GMT: Crude oil futures retraced some of last Friday's steep losses in mid-morning trade in Asia Monday as investor attention shifted from demand destruction caused by the growing spread of coronavirus to the upcoming OPEC+ meeting that will decide on future supply cuts.

At 10 am Singapore time (0200 GMT), May ICE Brent crude futures -- the new front month -- were up 54 cents/b (1.09%) from Friday's settle at $50.21/b, while the NYMEX April light sweet crude contract was 37 cents/b (0.83%) higher at $45.13/b.

The growing spread of coronavirus or COVID-19 outside China had sparked a wave of selling late last week, with oil futures settling at 14-month lows Friday.

Prices recovered some ground Monday as some investors returned to buy the dip while awaiting further cues from the OPEC+ meeting set for Thursday-Friday, analysts said.

"OPEC+ meets this week in a scheduled meeting to decide on supply policy, with the cartel heavily tipped to cut 1 million b/d at this meeting," OCBC analysts said in a note Monday.

The OPEC+ group is in the midst of trimming global output by 1.7 million b/d to soak up excess supply in the first quarter. The alliance is mulling whether to cut another 600,000 b/d of output due to the drop in oil demand from top oil importer China, where the coronavirus outbreak has crimped economic growth.

"As the coronavirus becomes more widespread and threatens to derail energy demand, a deeper cut than the one proposed in February is now needed," the OCBC analysts said.

Crude futures closed Friday down roughly 22% since January 20, when markets first began reacting to the virus, amid fears of weaker demand and economic downturn.

"Any optimism that follows a positive OPEC outcome could be short-lived and that oil will not begin to recover until COVID-19 is no longer seen as a risk," AxiCorp's chief market strategist Stephen Innes said Monday.

That said, Innes added that the bulk of the selling should be have been completed, unless the worst-case scenario of a super spreader COVID-19 hitting the US economy was realized.

S&P Global Platts Analytics has adjusted its 2020 global oil demand growth outlook down to 860,000 b/d, marking the weakest annual forecast since 2011.