Singapore — Crude oil futures moved higher during mid-morning trade in Asia Wednesday, recovering from an overnight slump that saw prices plunge by more than $3/b, amid mild bargain hunting. The market is awaiting the release of US crude stocks data later Wednesday for price direction.
At 11: 10 am Singapore time (0310 GMT), ICE February Brent crude futures were up 35 cents/b (0.62%) from Tuesday's settle at $56.61/b, while the NYMEX January light sweet crude contract moved 17 cents/b (0.37%) higher at $46.41/b.
"Prices are consolidating this morning amid some bargain hunting after the crash last night," Benjamin Lu, investment analyst at Phillips Futures, said.
"Overall sentiment, however, remains weak. US crude stock numbers today [Wednesday] will provide some direction," he added.
Both benchmark contracts on Tuesday touched fresh one-year lows, pressured by a poor economic outlook and growing supply concerns, analysts said.
"The continuing sell-off on the world's stock markets is clearly fueling fears of an economic slowdown next year, which would also have an impact on oil demand," Commerzbank analysts said in a note.
"Economic concerns in China and around the world weighed on the crude oil market," ANZ analysts said in a note Wednesday.
Chinese President Xi Jinping on Tuesday addressed his nation, calling for the implementation of reforms on Beijing's terms.
"There is no text book that can provide a golden rule, and there is no instructor who can boss around the Chinese people," Xi said at Beijing's Great Hall of the People.
This comes at a time of heightened tensions between the US and China on their trade policy, with a 90-day truce period currently in effect.
"Xi's speech at the start of an economic summit contained none of the new economic policies the market was hoping for. It also had a provocative tone, stoking fears that the negotiations in trade talks between the US and China may struggle to find a common ground," ANZ analysts said.
Furthermore, analyst reports quoting the American Petroleum Institute data released Tuesday showed that US crude stocks rose 3.45 million barrels for the week ended December 14.
Analysts surveyed Monday by S&P Global Platts expect US commercial crude stocks to have fallen 3 million barrels for the same period.
Market participants would be looking out for the official report from the US Energy Information Administration on US crude inventory data due for release later Wednesday.
The report would be closely watched as the EIA on Monday increased its projection for US shale production in January, to rise by 134,000 b/d to 8.166 million b/d, setting a bearish tone for prices, analysts said.
Elsewhere, Saudi Arabia's crude exports surged to a 21-month high of 7.701 million b/d in October, latest figures from the Joint Organizations Data Initiative showed.
The October figure was up 268,000 b/d from September and the highest since 7.713 million b/d in January 2017, when OPEC/non- OPEC cuts came into force.
The data comes at a time when investors are looking for more clarity on the announced 1.2 million b/d production cut by OPEC and its allies.
As of 0310 GMT, the US Dollar Index was down 0.21% at 96.34.
--Avantika Ramesh, avantika.ramesh@spglobal.com
--Edited by Geetha Narayanasamy, geetha.narayanasamy@spglobal.com