Crude oil futures rebound in Asia amid mixed cues

Singapore — 0325 GMT: Crude oil futures rebounded during mid-morning trade in Asia Sept. 14 as the impending resumption of Libya's oil exports and an unclear demand recovery were outweighed by supply disruptions brought about by an incoming hurricane in the US Gulf Coast.

At 11:25 am Singapore time (0325 GMT), ICE Brent November crude futures were up 22 cents/b (0.55%) from the Sept. 11 settle at $40.05/b, while the NYMEX October light sweet crude contract was up 31 cent/b (0.83%) at $37.64/b.

The NYMEX light sweet crude marker was boosted by production halts in the Gulf Coast of Mexico due to an incoming hurricane. Tropical Storm Sally -- described as an extremely dangerous and life-threatening storm, which will intensify into a hurricane -- is expected to hit the coast in Louisiana, Mississippi and Alabama on the evening of Sept. 14 to the morning of Sept. 15, according to the US National Hurricane Center.

Oil prices rebounded even as Libya announced that it could end the blockade of its oil export terminals and amid unclear demand recovery in the months ahead.

The announcement from Libya's military commander Khalifa Haftar comes "at the most unwelcoming time of the year," Stephen Innes, chief global markets strategist at AxiCorp, said in a Sept. 14 note.

"Libyan supplies hitting an already saturated international market is just the news OPEC+ did not want to hear, and likely explains Brent's underperformance vis-a-vis WTI," Jeffrey Halley, senior market analyst for Asia Pacific at Oanda, said in a note Sept. 14.

The announcement comes ahead of the OPEC and Non-OPEC Joint Ministerial Monitoring Committee meeting led by Saudi Arabia and Russia on Sept. 17.

"I doubt that OPEC+ will 'blink' this week and signal a move back to higher production cuts, the will just isn't there. Assuming that as a base case, oil prices are vulnerable to deeper downward corrections this week," Halley said.

Meanwhile, unclear demand recovery on the back of rising COVID-19 cases in some countries and a lack of positive vaccine news are also weighing on sentiment.

"The biggest issue is the weakness across gasoline and distillates. US gasoline demand has softened considerably in the last two weeks, which is the most worrying issue for short term traders," Innes said.

"Considering we are at the end of the summer driving season, demand tails off seasonally from September onwards. Weakening gasoline demand could further crimp refining margins," he added.

Fresh outlook updates are expected this week with the release of OPEC's monthly oil market report later Sept. 14 and the International Energy Agency's monthly report on Sept. 15.