Crude futures rebound in Asia trade after overnight fall, but uncertainty remains

Singapore — 0150 GMT: Crude oil futures rebounded in mid-morning trade in Asia Friday after an overnight fall, but the continuing uncertainty over the demand-supply outlook will cap the recovery, analysts said.

At 9:50 am Singapore time (0150 GMT), ICE Brent July crude futures were up 52 cents/b (1.77%) from Thursday's settle at $29.98/b, while the NYMEX June light sweet crude contract was 56 cents/b (2.38%) higher at $24.11/b.

Crude futures had settled lower overnight Thursday as traders looked to book profits amid the uncertain outlook.

Prices edged higher Friday morning in Asia on expectations of a gradual recovery in oil demand, but the market remains skeptical the rebound will be substantial.

"In the COVID-19 environment, investors are struggling to gauge how consumption evolves from a sudden stop in global economic activity to how the gradual reopening will supplicate that demand," AxiCorp chief market strategist Stephen Innes said in a note Friday.

Analysts are expecting gasoline demand to recover globally amid an easing of lockdowns as more countries move tentatively in May to reopen businesses and schools.

"But to sustain this rally, you need more than people driving around the block; you need the heartland industrial engines firing on all cylinders and planes taking to the air," Innes added.

The outlook remains volatile as investors continue to grapple with mixed drivers in the market.

Some support was seen after Saudi Aramco raised its June official selling prices, signaling an easing in the two-month price war that has pushed producers' margins close to zero.

However, optimism was tempered by substantial builds in US crude inventories in latest US Energy Information Administration data. US crude inventories climbed 4.59 million barrels to 532.22 million barrels last week, according to EIA data released Wednesday.

"Oil takers continue to pile up around the world as the lockdown measures hit demand," ANZ analysts said in a note Friday. "There are signs of demand recovering... but it remains well below what it still required to balance the market," the analysts added.