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Crude oil futures were sharply higher in mid-morning Asian trade May 13 amid recouping signs from the financial markets that witnessed heavy sell off this week on global growth risks and mounting inflationary pressures, while supply concerns continued to plague the oil markets.

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At 10:38 am Singapore time (0238 GMT), the ICE July Brent futures contract was up $1.60/b (1.49%) from the previous close at $109.05/b, while the NYMEX June light sweet crude contract rose $1.36/b (1.28%) at $107.49/b.

Analysts said oil prices have likely bottomed out after plunging by more than 9% earlier this week. Crude oil prices had attempted a rebound in the May 12 session, but failed to hold onto gains and settled mostly unchanged on the day.

"The oil market was choppy yesterday. ICE Brent traded in almost a $4/b range, although [it] settled almost unchanged on the day," said ING analysts Warren Patterson and Wenyu Yao in a May 13 note.

Most Asian equity indices were trading higher on the day, in a sign that the sell off that gripped financial markets this week may have abated.

"Overall sentiments seem to be seeing some slight reprieve in the Asia's session after its recent sell-off, but markets may need a relief catalyst for a more sustaining upside. China's virus situation remains on close watch, with ongoing efforts to contain spreads and minimise economic disruptions," said IG market strategist Yeap Jun Rong.

Global growth risks

Risk assets have been plunging amid recession fears and still-soaring inflation prints, with the US' S&P 500 index on the cusp of a bear market as of May 12.

OPEC's latest monthly report out May 12 showed the group lowering their global oil demand outlook for 2022 by 210,000 b/d to 100.29 million b/d.

OPEC also lowered its global economic growth forecast for 2022 to 3.5% from 3.9%, with Russia seen in contraction and growth estimates lowered from last month for the US, the Eurozone, Japan, China, India, and Brazil.

The lower demand forecasts were mirrored in the International Energy Agency's latest monthly oil market report also out May 12. The agency trimmed its global oil demand growth forecast for 2022 by 70,000 b/d. This followed a 240,000 b/d growth reduction in April and a major 950,000 b/d hit to overall oil demand in March in wake of Russia's invasion of Ukraine.

Global oil demand this year is now expected to increase by 1.8 million b/d over 2021 to average 99.4 million b/d, the IEA said.

Most analysts expect oil markets to remain severely undersupplied for the remainder of this year, putting a floor under any price declines.

"Oil product inventories are falling sharply, ahead of the summer driving season and strong export demand. We see the oil market undersupplied for rest of this year," said ANZ Research analysts Daniel Hynes and Soni Kumari.

European Union member Hungary remained opposed to an EU plan to ban Russian oil imports, lessening the risk of a sharp supply disruption.

Dubai crude swaps and intermonth spreads were higher in mid-morning trade in Asia May 13 from the previous close.

The July Dubai swap was pegged at $100.60/b at 10 am Singapore time (0200 GMT), up $3.16/b (3.24%) from the May 12 Asian market close.

The June-July Dubai swap intermonth spread was pegged at $2.50/b at 10 am, up 16 cents/b over the same period, and the July-August intermonth spread was pegged at $1.87/b, up 14 cents/b.

The July Brent/Dubai EFS was pegged at $8.17/b, up 25 cents/b.