Crude futures rebound in Asia trade on hopes of further economic stimulus

Singapore — 0200 GMT: Crude oil futures retraced some losses in mid-morning trade in Asia Thursday after a drastic fall Wednesday as hopes of further economic stimulus measures helped sentiment recover slightly.

At 10 am Singapore time (0200 GMT), ICE Brent May crude futures were up $1.74/b (6.99%) from Wednesday's settle at $26.62/b, while the NYMEX April light sweet crude contract was $2.48/b (12.2%) higher at $22.85/b.

Prices steadied in early trade Thursday following a drastic slide Wednesday, when front-month Brent tumbled 13.4% day on day to the lowest level since May 2003 and prompt WTI futures plunged more than 24% over the same period to the lowest level since February 2002.

"Markets continue to be choppy, with a strong increase in oil prices this morning following the double positive news flow of US fiscal stimulus and ECB monetary stimulus," OCBC analysts said in a note Thursday.

US President Donald Trump has asked Congress for a $1 trillion stimulus package, with a proposed $50 billion bailout of his country's airline industry, while the European Central Bank said it was launching an expanded program to buy financial assets in a bid to calm markets and counter the economic impact of the coronavirus outbreak, flagging a Eur750 billion pandemic bond-buying program.

Nonetheless, oil market fundamentals remained pessimistic about a significant recovery against a backdrop of growing supply and falling demand.

"Expect prices to remain choppy short term and to sit at depressed levels in the medium term," the OCBC analysts added.

The global economy is headed toward a recession in 2020 due to the coronavirus pandemic that has rattled markets and triggered credit stress worldwide, S&P Global Ratings said in a report.

The ratings agency now estimates 2020 global GDP to grow around 1%-1.5% amid travel restrictions in the US and Europe and a delayed recovery in China, with risks tilted toward the downside.

With a rapid spread of the virus in the US, the economy is expected to post growth of negative 0.5% to flat in 2020, S&P Global Ratings said .