SINGAPORE: Oil prices steadied on Monday after plunging nearly 8 percent in the previous session but remain under pressure with Brent crude below $60 per barrel amid weak fundamentals and struggling financial markets.
Front-month Brent crude oil futures were at $59.23 per barrel at 0202 GMT, up 43 cents, or 0.7 percent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures, were up 11 cents, or 0.2 percent, at $50.53 per barrel.
The gains did little to make up for Friday’s selloff, which traders have already dubbed ‘Black Friday’.
Reacting to Friday’s falls in Brent and WTI, China’s Shanghai crude futures on Monday fell by 5 percent, hitting their daily downside-limit.
The downward pressure comes from surging supply and a slowdown in demand growth which is expected to result in an oil supply overhang in 2019.
Oil markets are also being affected by a downturn in wider financial markets.
“2018 clearly marked the end of the 10-year Asia credit bull market due to tightening financial conditions in Asia (especially China), and we expect this to remain the case in 2019,” Morgan Stanley said in a note released on Sunday.
“We don’t think that we are at the bottom of the cycle yet,” the U.S. bank said.
Oil markets have also been weighed down by a strong U.S.-dollar, which has surged against most other currencies this year, thanks to rising interest rates that have pulled investor money out of other currencies and also assets like oil, which are seen as riskier than the greenback.
Another risk to global trade and overall economic growth is the trade war between the world’s two biggest economies, the United States and China.