NYMEX crude rebounds in Asia trade after drastic decline, Brent extends fall

Singapore — 0145 GMT: NYMEX crude oil futures rebounded in mid-morning trade in Asia Wednesday after settling sharply lower Tuesday, while Brent shrugged off the uptick as the risk of further downside due to bearish fundamentals continued to weigh.

At 09:45 am Singapore time (0145 GMT), the new prompt-month NYMEX June light sweet crude contract was up $1.12/b (9.68%) from Tuesday's settle at $12.69/b, while ICE Brent June crude futures were down 62 cents/b (3.21%) at $18.71/b.

The June NYMEX contract had settled 43% lower day on day Tuesday as stocks continue to build amid substantial declines in demand.

"Oil prices lifted off the mat after [NYMEX] June delivery tumbled as much as 43% as the fear of delivery risk compounded the storage saturation scenario," AxiCorp's chief market strategist Stephen Innes said in a note Wednesday. "The super contango in the WTI curve beyond the front-month contract suggests that near-term downward pressure will remain static until the lifting of lockdowns in the US triggers more robust demand," he added.

Overall market sentiment has weakened since NYMEX prices plunged into negative territory for the first time ever on Monday.

"With the rolling over of the oil futures contract, we have likewise seen the rolling over of demand concerns," IG market strategist Pan Jingyi said in a note Wednesday.

"Despite the current cost of production and crude oil price dynamics making little sense for producers such as the US, the overtly bearish sentiment may well keep prices suppressed in the near term," Pan added.

Concerns are growing over the lack of available storage to hold the excess crude supply. Overall US commercial crude storage is close to 60% full and could be entirely full in a month, Platts reported earlier.

The recent OPEC+ deal failed to alleviate concerns of a supply glut as the extent of declining demand outweighs the agreed cuts, analysts said.