Tokyo - Oil prices rebounded in Asian trade on Tuesday on bargain hunting following sharp falls stoked by turbulence in global financial markets, as nervous traders await the US Federal Reserve's next move on its stimulus programme.
New York's main contract, West Texas Intermediate (WTI) for March delivery, was up nine cents at $95.81 in mid-morning trade while Brent North Sea crude for March gained 26 cents at $106.95.
WTI sank 92 cents in New York trade Monday while Brent fell $1.19 in London, tracking heavy losses in global equity markets spurred by weak corporate earnings and uncertainty in emerging economies.
Financial markets have also been shaken by data last week indicating manufacturing activity in China - the world's top energy consumer and a key driver of global growth - had contracted in January.
“Markets remain skittish and the mood is somewhat cautious as the focus remains on emerging market travails,” French lender Credit Agricole said in a note.
“The current bout of pressure may yet be contained but there is still some way to go before market stress is alleviated,” it said.
Kelly Teoh, market strategist at IG Markets in Singapore, said investors were also keenly awaiting the outcome of a two-day US Federal Reserve policy meeting scheduled to end on Wednesday.
The US central bank's Federal Open Market Committee (FOMC) is widely expected to decide on a further $10 billion reduction in its monthly asset purchases, to $65 billion.
In December, the FOMC said it would begin tapering the stimulus by $10 billion to $75 billion a month in January.
The so-called tapering of the Fed's asset purchases would likely boost the greenback, making dollar-priced oil more expensive for countries using other currencies, dampening demand.
Teoh said there was a likelihood that the Fed could surprise investors by deciding against a further pullback of its stimulus due to the emerging market strains.
“They (the Fed) can see that there is a lot of volatility in the market already as it is,” she told reporters.