Crude futures rebound in Asia trade on uptick in risk appetite; outlook remains volatile

0200 GMT: Crude oil futures were higher in mid-morning trade in Asia Wednesday amid a marginal improvement in risk appetite, though analysts said prices were likely to remain volatile in the near term.

At 10 am Singapore time (0200 GMT), ICE Brent June crude futures were up 65 cents/b (3.18%) from Tuesday's settle at $21.11/b, while the NYMEX June light sweet crude contract was $1.57/b (12.72%) higher at $13.91/b.

"Volatility in oil futures rippled through the commodity complex, but optimism about the economic recovery improved risk appetite," ANZ analysts said in a note Wednesday.

Some countries are reopening businesses and schools gradually, according to media reports. France and Spain have recently announced measures to begin the easing of lockdowns.

Nonetheless, analysts said that June crude futures are still subject to downward pressure owing to bearish demand and excess supply.

The lack of storage capacity remains a huge concern as the US is expected to run out of commercial crude storage from May, while the latest OPEC+ agreement has failed to alleviate oversupply concerns.

"OPEC+ cuts start soon and should provide some semblance of support, but the inventory gluts which could continue to build will likely make purposeful upside little more than a grand illusion at this stage," AxiCorp's chief market strategist Stephen Innes said in a note Wednesday.

OPEC+ has agreed to collectively cut production by 9.7 million b/d, about 10% of global supply, in May and June, followed by a 7.7 million b/d reduction in the second half of 2020.

The market is also continuing to monitor developments on the geopolitical front amid reports Tuesday of a fuel tanker bombing in the northern Syrian city of Afrin, a mainly Kurdish region that was seized by Turkey two years ago in a military offensive.