Crude oil futures steady after overnight rally as demand uncertainty remains

Singapore — 0210 GMT: Crude oil futures were steady to marginally lower in mid-morning trade in Asia June 23 following an overnight rally, as demand uncertainty continues amid concerns of a second wave of COVID-19 infections.

At 10:35 am Singapore time (0235 GMT), ICE Brent August crude futures slipped 1 cent/b (0.02%) from the June 22 settle at $43.07/b, while the new front-month NYMEX August light sweet crude contract was 4 cents/b (0.1%) lower at $40.69/b.

Prices settled higher June 22 owing to a tighter global supply outlook, but came off this morning as uncertainty continued to cap gains.

"In an environment where the WHO [World Health Organization] had only recently announced on Sunday a record increase in global COVID-19 cases, sentiment can certainly still turn very promptly with the flick of the switch," IG's market strategist Pan Jingyi said in a June 23 note, referring to markets in Asia.

Trading sentiment remains cautious as investors continue to weigh mixed drivers in the recent oil market.

"Still, the markets will remain nervous and sensitive to bad news... sentiment could quickly reverse on a dime after the extended rally in oil," Axicorp chief global markets strategist Stephen Innes said in a June 23 note.

Innes added that the outlook depends on whether evidence of shut-in global non-OPEC production returns, as a result of higher oil prices.

Recent efforts by OPEC+ to step up compliance have helped to support prices for now.

Meanwhile, signs of slowing US drilling helped provide a floor to prices, with US oil rigs trending lower in recent weeks.

The US' commercial crude stocks are also expected to have declined 100,000 barrels to around 539.3 million barrels during the week ended June 19, analysts surveyed by Platts said. The market looks towards inventory data to be released June 24 by US EIA for a clearer direction.