Crude edges up as COVID-19 lockdowns ease in some countries

Singapore — 0228 GMT: Crude oil futures edged up in midmorning trade in Asia Friday as COVID-19 lockdown measures appear to be easing in some countries going ahead.

At 10:28 am Singapore time (0228 GMT), ICE Brent June crude futures rose 54 cents/b (1.94%) from Thursday's settle at $28.36/b, while the NYMEX May light sweet crude contract was 4 cents/b (0.20%) higher at $19.91/b.

US President Donald Trump gave governors a road map Thursday on the gradual reopening of state economies in the coming months, according to media reports.

The new guidelines are aimed at easing restrictions in cities with lower COVID-19 transmission rates.

Elsewhere, Germany and Italy will also see more gradual reopening of businesses going ahead after earlier lockdowns, media reports showed this week.

Demand for refined products took a hit in recent weeks after COVID-19 lockdown measures and stay-at-home notices were implemented across the world.

"There is emerging evidence of the virus peaking in key economies under COVID-19 lock-down...a more rapid recovery of global demand via reopenings or a more effective supply response could mean upside surprise," said AxiCorp's chief market strategist Stephen Innes in a note Friday.

"Macro data as it relates to oil demand, and the market, in general, presents another significant headwind...the market will likely rebalance slowly as the OPEC+ deal in its current format won't offset Q2 demand," added Innes.

Prices are subject to continued volatility and downside risks for the next few months against a backdrop of oversupply, according to analysts.

The forward curve for Brent swaps is also likely to remain in a steep contango, with analysts saying the production cuts are just not enough to balance the plunge in demand, S&P Global Platts reported earlier.

Demand for oil storage is expected to surge rapidly as a steep contango provides more incentive for market participants to stock oil for later use.