Crude oil futures stabilize after settling down sharply

Crude oil futures stabilised in mid-morning trade in Asia Tuesday after a sharp overnight plunge in settled prices, but the outlook remains volatile ahead of key trade events. At 10:25 am Singapore time (0225 GMT), ICE March Brent crude futures edged up 11 cents/b (0.18%) from Monday’s settle at $60.04/b, while the NYMEX March light sweet crude contract inched higher 13 cents/b (0.25%) at $52.12/b.

Oil futures had settled sharply lower Monday after US equity markets opened in the red, but rebounded following reports that the US was preparing to issue sanctions on Venezuela’s state-owned oil company, PDVSA. While concerns emerged over a global slowdown, analysts said that OPEC production cuts continued to provide a floor to price declines.

“Prices have been supported by early signs that OPEC and its allies are delivering on their pledge to cut production by 1.2 million barrels a day in order to drain oversupply from the market,” analysts at UOB Bank said Tuesday. “WTI is up more than 14% this month, whilst Brent is on pace for a gain of about 11%,” the UOB analysts added. Upcoming key trade events would also keep trading sentiment unpredictable.

“US-China trade talks, an escalating crisis in Venezuela and the Fed policy statement should keep commodity prices volatile,” ANZ analysts said Tuesday. Ongoing trade tensions between Beijing and Washington could slow China’s economic growth and in turn dampen its demand for oil. As of 0225 GMT, the US dollar index was stable at 95.425.