Crude oil futures rebound as potential supply deal spurs optimism

Singapore — 0225 GMT: Crude oil futures rose in mid-morning trade in Asia Tuesday, overturning some of the overnight losses, as the potential of a crude oil deal spurred some optimism into the market again.

At 10:25 am Singapore time (0225 GMT), ICE Brent June crude futures rose 89 cents/b (2.69%) from Monday's settle at $33.94/b, while the NYMEX May light sweet crude contract was 94 cents/b (3.55%) higher at $27.02/b.

Hopes of supply cut discussions remained with an OPEC+ meeting still slated to take place online on Thursday. The meeting was originally scheduled for Monday.

An emergency meeting of the G20 energy ministers is also tentatively slated for Friday for other countries to discuss how much they might be willing to scale back crude production.

Losses have pared for now as the market awaits further developments from these upcoming meetings, but analysts said that a recovery remains capped.

"With a lack of details, it is still unknown on how such deep output cuts can be achieved without the participation of the US, which is the world's biggest crude oil producer at 13 million b/d," OCBC analysts said in a note Tuesday.

The collapse in oil demand from the COVID-19 outbreak has brought Saudi Arabia and Russia back to the negotiating table after earlier talks of further cuts fell apart in March.

Nonetheless, this would depend on whether there can be a firm commitment from the US to join in the cuts.

Meanwhile, stock markets rose Monday on evidence that the coronavirus spread is peaking in some countries, but analysts cautioned of continued volatility.

"The lightened mood descending on markets follow reports of reduced rate of death toll increase across COVID-19 hotspots," IG market strategist Pan Jingyi said in a note Tuesday.

"We are once again expecting a slew of data into the end of the week ahead of Q1 [first-quarter] earnings next week that could still see risks of near-term volatility. Ultimately, it may still be a slow battle with COVID-19 lacking any cure or vaccines on hand," Pan added.