Chevron oil exploration drilling site near Midland, Texas on August 22 2019. Picture: REUTERS/Jessica Lutz
Chevron oil exploration drilling site near Midland, Texas on August 22 2019. Picture: REUTERS/Jessica Lutz

Singapore — Oil futures rebounded on Thursday, reversing losses earlier in the day, as fears over the worsening global economic outlook that hit prices hard in the previous session gave way to modest hopes for progress in resolving the US-China trade war.

Brent crude oil futures edged 10 cents higher, or 0.2%, to $57.79 a barrel by 2.09am GMT, after tumbling 2% in the previous session.

US West Texas Intermediate (WTI) crude futures were up 23 cents, or 0.4%, to $52.87 a barrel, after sinking by 1.8% on Wednesday.

“What’s impossible to ignore is the economic realities being signalled in the latest run of doom and gloom financial market data, which offers few if any reason for oil investors to be optimistic over the outlook for global demand,” said Stephen Innes, market strategist at SPI Asset Management.

World equity benchmarks hit their lowest levels in a month on Wednesday as signs of a slowdown in US economic growth and weak earnings in Europe fanned fears the global economy could slip into recession.

Still, Wednesday’s slide to near two-month oil price lows proved an attractive enough buying opportunity for some.

“While the near-term triggers may continue to relate to oil demand, next week US-China trade talks remain the unknown variable which could lend a modicum of support,” said Innes.

Also hurting sentiment in the previous session was US crude inventories rising 3.1-million barrels last week, according to the country’s Energy Information Administration, far exceeding analyst expectations for an increase of 1.6-million barrels.

Brent futures are now well below levels seen before the September 14 attacks on Saudi Arabia oil facilities that briefly halved more than half the kingdom’s output.

“The market is clearly fixated on the potential impact of weak economic growth on oil demand, with supply side issues taking a back seat for the moment,” said ANZ. 

Reuters