Crude oil futures steadies after overnight fall but weak demand caps rally

0257 GMT: Crude oil futures were steady in mid-morning trade in Asia Friday after an overnight decline, but analysts said that weak demand prospects will continue to limit recovery in the near term.

At 10:57 am Singapore time (0257 GMT), ICE Brent May crude futures were up 20 cents/b (0.76%) from Thursday's settle at $26.54/b, while the NYMEX May light sweet crude contract was 36 cents/b (1.59%) higher at $22.96/b.

Crude futures had settled lower Thursday, ending a three-day up streak as the market refocused on coronavirus-related demand destruction.

While expectations of a $2 trillion US stimulus package helped buoy sentiment to some extent, prices are likely to remain capped amid bearish prospects.

"Asian demand is falling as India also announced a lockdown for 21 days. This will reduce the oil demand from refiners," ANZ analysts said in a note Friday.

"Investors seem worried about running out of storage capacity for oil in a backdrop of falling demand," the analysts at ANZ added.

Over the next few months, Platts Analytics sees global "massive" crude stock builds of 500 million barrels in its best-case scenario, compared with the 1 billion-barrel build in its worst-case scenario, relative to end-Feb levels.

The global coronavirus spread will cause oil demand to drop by roughly 20 million b/d to about 80 million b/d this year, Fatih Birol, executive director of the International Energy Agency, said Thursday.

Concerns of a growing supply glut also capped recovery, as Saudi Arabia and Russia have yet to back off their plans to expand market share despite the drop in demand.

"The oversupply hang from OPEC+ means oil prices are unlikely to participate as strong a rally as US equities are poised to, even though Congress is near in approving its $2 trillion fiscal support package," OCBC analysts said in a note Friday.

The US Senate has approved the $2 trillion US stimulus package, which will next go to the White House for a vote, according to media reports.