Crude climbs amid possibility of joint US-Saudi oil alliance

Singapore — 0146 GMT: Crude futures were higher in mid-morning trade in Asia Tuesday as the possibility of a joint US-Saudi oil alliance to stabilize prices emerged.

At 09:46 am Singapore time (0146 GMT), ICE Brent May crude futures rose $1.18/b (4.37%) from Monday's settle at $28.21/b, while the NYMEX May light sweet crude contract was $1.20/b (5.14%) higher at $24.56/b.

Emerging talks of a possible alliance between the US and Saudi Arabia helped lift sentiment, analysts said.

"Oil bulls continue to hold on to a glimmer of hope after US Energy Secretary Dan Brouillette said the possibility of a joint US-Saudi oil alliance is one idea under consideration to stabilize prices," AxiCorp's chief market strategist Stephen Innes said Tuesday.

Oil futures also settled higher Monday against a backdrop of a weakened dollar, after the US Federal Reserve announced an open-ended asset purchase commitment.

The US central bank said early Monday it had committed to unlimited purchases of US Treasuries and agency mortgage-backed securities, as well as the setting-up of additional lending tools to shore up struggling companies and financial markets.

However, a cautious outlook persisted as demand destruction continues amid lockdowns in countries, with downstream demand for jet fuel expected to take the biggest hit.

"All the money in the world is not going to get people back on planes so long as the virus is spreading, and travel bans are in place," Innes said.

Global refiners have also begun to cut runs to meet the lower demand and delayed planned work to manage the spread of COVID-19, S&P Global Platts reported.

"With no signs of Saudi Arabia or Russia returning to the table, and the coronavirus situation still yet to show stabilization in the US and Europe, expect prices to remain at current levels in the short term," OCBC analysts said in a note Tuesday.

"Prices remain suppressed, with many US producers reportedly starting to reduce runs," they added.