Crude oil futures steady as concerns over economic uncertainty persist

Singapore — 0236 GMT: Crude oil futures were steady during mid-morning trade in Asia Thursday as economic uncertainty keeps market sentiment cautious.

At 10:36 am Singapore time (0236 GMT), ICE Brent July crude futures fell 9 cents/b (0.31%) from Wednesday's settle at $29.10/b, while the NYMEX June light sweet crude contract rose 9 cents/b (0.36%) at $25.38/b.

The backdrop of economic uncertainty following the COVID-19 pandemic continues to cap market recovery despite earlier signs of optimism.

"Risk sentiment abated yesterday after Fed Chair [US Federal Reserve chairman] Jerome Powell warned of broad virus danger. We think Brent is likely to continue hovering around $30/b in the short term," OCBC analysts said in a note Thursday.

US Federal Reserve chief Jerome Powell warned of an extended period of weak economic growth on Wednesday and called for additional fiscal support, according to media reports.

Meanwhile, commercial crude stocks fell 750,000 barrels last week, the latest US EIA data showed on Wednesday. Analysts surveyed by S&P Global Platts on Monday had expected a 4.8 million-barrel build.

Nonetheless, the surprise drawdown in US crude inventories failed to lift sentiment as stockpiles remained about 11.4% above the five-year average.

"More promising was the fall in gasoline inventories, which was down 3.5 million barrels. However, this was driven more by a sharp fall in refinery runs than a pick-up in underlying demand," ANZ analysts said in a note Thursday.

Nationwide refinery utilization fell by 2.6 percentage points to 67.9% of total capacity, the EIA data showed.

OPEC's latest supply estimates also added to existing concerns that the cuts are not sufficient to balance out the fall in demand.

OPEC would have to nearly halve its crude oil production in the second-quarter to balance the market, according to the organization's latest analysis released Wednesday.

OPEC, which pumped 30.41 million b/d in April, now sees the market's demand for its crude coming in at 16.77 million b/d this quarter, it said in its closely watched monthly oil market report on Wednesday.