Crude futures dip in Asia trade as supply cuts unlikely to outweigh demand loss

Singapore — 0215 GMT: Crude oil futures were lower in mid-morning trade in Asia Monday as focus remained on oversupply concerns, with recent supply cuts widely considered unlikely to balance the unprecedented demand destruction stemming from global COVID-19 pandemic lockdowns in recent weeks.

At 10:15 am Singapore time (0215 GMT), ICE Brent June crude futures were down 30 cents/b (1.40%) from Friday's settle at $21.14/b, while the NYMEX June light sweet crude contract was $1.31/b (7.73%) lower at $15.63/b.

"Crude oil inched higher on Friday as signs of further production cuts emerged. However, rising inventories and weak demand are weighing heavily on sentiment," ANZ analysts said in a note Monday. "Oil storage tanks continue to fill. US inventories rose by 15 million barrels last week," the analysts added.

Demand for transportation fuels has plunged amid global lockdowns, especially for jet fuel as most flights remain grounded.

Meanwhile, oil drillers continue to pare back activity amid record low prices and depressed oil demand worldwide.

Baker Hughes' US oil and gas rig count fell 64 to 465 on Friday, following a drop of 73 rigs the previous week, S&P Global Platts reported earlier. The Baker Hughes count has dropped by 41%, or 327 rigs, since mid-March.

The outlook for prices remains volatile following last week's wild swings, which included the prompt-month WTI plunging into negative territory for the first time in history.

"[The] oil markets, despite having calmed down from the tumult of the last week, could still become skittish," Mizuho Bank analysts said in a note Monday.

Focus remains on COVID-19 developments. The global number of confirmed cases worldwide had risen to 2.97 million early Monday, based on latest available Johns Hopkins University data.