New York — Crude oil futures were largely steady in mid-morning trade in Asia Wednesday after the US imposed sanctions on Russian oil major Rosneft Tuesday.
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At 10:10 am Singapore time (0210 GMT), April ICE Brent crude futures were up 9 cents/b (0.16%) from Tuesday's settle at $57.84/b, while the NYMEX March light sweet crude contract was 8 cents/b (0.15%) higher at $52.13/b.
The US on Tuesday imposed sanctions on Rosneft Trading SA, the Geneva-based subsidiary of the Russian state oil company, for supporting Venezuela's oil sector by continuing to trade with sanctions-hit PDVSA, S&P Global Platts reported earlier.
"Their Swiss trading arm has been Venezuela's primary conduit for brokering cargoes, which find their way predominantly to refineries in India and China. So, throttling this Asian supply channel will provide some support for oil prices," AxiCorp's chief market strategist Stephen Innes said Wednesday.
The US Treasury Department gave companies 90 days to wind down activities with Rosneft Trading SA, mitigating the near-term impact of the sanctions on oil fundamentals.
News of the sanctions also provided a temporary floor to further price declines arising from the demand destruction caused by the coronavirus or COVID-19 outbreak, but the market was still bracing for a bleak demand outlook.
"Investors are seeing softer oil demand is a grim reality of the market and expect demand to remain subdued this quarter," ANZ analysts said in a note Wednesday.
"Storage tanks of refined oil products are reaching capacity, and soon refiners will have to reduce demand for crude oil," the analysts said.
Supply constraints in the Middle East could also offset the impact of COVID-19 on demand for the moment, with supply from key producer country Libya remaining curtailed, the ANZ analysts noted.