Singapore — Crude oil futures retraced losses in mid-morning trade in Asia Wednesday following a sharp overnight decline, though the near-term outlook remains volatile.
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At 10:30 am Singapore time (0230 GMT), December ICE Brent crude futures were up 49 cents/b (0.65%) from Tuesday's settle at $76.40/b, while the NYMEX December light sweet crude contract was 29 cents/b (0.44%) higher at $66.47/b.
Oil prices settled had sharply lower Tuesday due to heightened trade tensions between the China and the US, with the recovery Wednesday made possible in part by rising equities.
"US [equities] markets rebounded overnight, giving Asia markets a more benign lead, although the surge can really be seen as part of a continuation of this state of volatility," IG market strategist Pan Jingyi said.
The near-term outlook for energy markets remains underpinned by bearish factors, analysts said.
"Oil slid to the lowest levels [Tuesday] since August as escalating trade tensions between the US and China threatened to derail global growth and hence energy demand at a time when US crude inventories are increasing," UOB analysts said.
The market is also eyeing a US inventory build this week. Analysts surveyed Monday by S&P Global Platts were expecting US crude supply to rise by 3.3 million barrels to 426.1 million barrels in weekly data due for release later Wednesday.
Platts analysis Monday also showed that an uptick in refinery utilization in the US likely failed to curb inventory builds last week.
Rising US inventories in recent weeks have pushed the NYMEX crude structure into contango.
As of 0230 GMT, the US dollar index was up 0.01% at 96.785.
--Jeslyn Lerh, firstname.lastname@example.org
--Edited by Wendy Wells, email@example.com