Crude steadies after overnight rally on improved outlook

Singapore — 0220 GMT: Crude oil futures were steady in midmorning trade in Asia Friday after surging overnight Thursday, as prices held rangebound amid expectations of a better supply-demand outlook.

At 10:20 am Singapore time (0220 GMT), ICE July Brent crude futures rose 10 cents/b (0.32%) from Thursday's settle at $31.23/b, while the NYMEX June light sweet crude contract was 9 cents/b (0.33%) lower at $27.47/b.

Bullish supply drivers lifted prices, even as demand uncertainty capped price recovery.

"Oil prices have come roaring back after the International Energy Agency's monthly oil market report flags a dramatic supply response from non-OPEC producers," said Axicorp chief global markets strategist Stephen Innes in a note Friday.

The IEA said in its monthly report Thursday that the oil market may start to rebalance quicker than originally anticipated.

The agency revised its forecast of the average decline in oil demand for 2020 to 8.6 million b/d, less severe than the fall of 9.3 million b/d it forecast last month.

However, it said a recovery will depend on whether governments can ease COVID-19 lockdown measures without causing further outbreaks.

Signs of compliance with OPEC+ supply cuts also lifted sentiment.

"Saudi Aramco said it cut crude oil sales to the US and Europe by half. This came after the International Energy Agency said the global oil market was improving with demand a little stronger than expected," said ANZ analysts in a note Friday.

OPEC+ ministers will next meet via webinar June 9-10 to assess the market and decide on upcoming steps.

The OPEC+ cuts are scheduled to taper down to 7.7 million b/d for the second half of 2020, and then to 5.8 million b/d from January 2021 to April 2022.

Nonetheless, concerns remained over a second wave of COVID-19 infections going forward, which could hinder the easing of lockdown measures across the world.