Crude oil futures rebound 2% on optimism over Trump's recovery

Singapore — 0239 GMT: Optimism over the recovery of US President Donald Trump from a coronavirus infection boosted crude oil futures at the Oct. 5 Asia open, rebounding from Oct. 2's more than 4% slide, when news of his coronavirus diagnosis threw the oil market into disarray.

At 10:39 am Singapore time (0239 GMT), ICE Brent December crude futures were up 71 cents/b (1.81%) from the Oct. 2 settle at $39.98/b, while the NYMEX November light sweet crude contract was 80 cents/b (2.16%) higher at $37.85/b.

Both international crude benchmarks had dived 4.05% and 4.31% on the day on Oct. 2, with the ICE Brent settle at $39.27/b and NYMEX at $37.05/b.

"Oil prices nudged higher at the [Asia] open, tracking broader markets, after the [US] president's medical staff offered up an optimistic healthcare prognosis," AxiCorp's Chief Global Market Strategist Stephen Innes said in an Oct. 5 note.

The drop in crude futures on Oct. 2 came as the oil markets, which were already reeling from the continuing onslaught of bearish demand and supply factors, were further rattled by news that Trump had tested positive for coronavirus.

ANZ analysts in their Oct. 5 note said: "Futures have been under pressure for several weeks, as rising infection rates of coronavirus in Europe and the US have raised concerns about the continued rebound in economic activity. However, the announcement that President Trump and several other White House officials had contracted the virus reinforced this view, with Brent and WTI crude falling sharply in late trading on Friday."

However, with Trump's medical team giving increasingly optimistic assessments on his health Oct. 4, crude futures rebounded at Asia's open Oct. 5.

The outlook for oil remains bleak as the prospect of renewed lockdown restrictions amid a resurgence of the pandemic threatens to stall global economic recovery and depress oil demand, all while the OPEC+ alliance struggles to reduce supply through compliance with its production quotas.

Amid these unsupportive fundamentals, the trajectory of crude futures this week is expected to be sensitive to news flows on the status of coronavirus cases as well as the US stimulus package.

House speaker Nancy Pelosi said in an MSNBC interview on Oct. 2 that Trump's positive coronavirus diagnosis could encourage the Republicans to extend further support to a stimulus bill, with Trump himself calling for the approval of the bill in an Oct. 4 tweet.