Investors await signs that the world is winning the battle against the disease. PHOTO: AFP/FILE.
OPEC producers dominated by Saudi Arabia and allies led by Russia thrashed out a compromise deal on Sunday to cut production by nearly 10 million barrels per day from May.
Oil futures surged in early Asian trade, with WTI climbing nearly 8% and Brent up 5% before both benchmarks pared their gains in afternoon trade.
The rally followed months of slumping prices after the COVID-19 outbreak sapped demand as countries around the world put their populations under lockdown.
A Saudi-Russian price war also saw the ramping up of production as both countries bid to hold on to market share and undercut US shale producers.
OPEC Secretary General Mohammad Barkindo called the cuts "historic" in size but analysts said the measures may not go far enough to secure a long-term rebound.
"There remain concerns the agreement could be a day late and a 'barrel short' to prevent a decline in prices in the coming weeks as storage capacity brims," said AxiCorp chief market strategist Stephen Innes.
Investors are waiting for signs that the world is winning the battle against the disease, which has now infected more than 1.8 million people and claimed more than 112,500 lives globally.
The weekend saw glimmers of hope that the crisis may have peaked in some of the hardest-hit countries.
"The most critical question for the economic outlook is whether, and how quickly, the coronavirus outbreak will decrease," said Innes.
"Politicians need to walk a fine line making sure that shutdown activity doesn't cause permanent and lasting damage to their domestic economies," he said.
Tokyo closed 2.3% lower on the back of a stronger yen and investor disappointment over a lack of asset-buying from the Bank of Japan.
Seoul dropped 1.9%, Shanghai finished down 0.5% and Singapore fell 0.4%, while Hong Kong, Sydney and Wellington were closed for a public holiday.
More whirlwind sessions are likely this week, with new economic data to reveal the extent of the economic havoc unleashed by the COVID-19 pandemic on the world's top two economies.
The US kicks off its quarterly earnings season from Tuesday with reports from major banks.
Analysts are predicting S&P 500 companies will report a drop in profits ranging from six to 15%, with worse declines in the second quarter.
China will release balance of trade figures on Tuesday, while forecasters expect a quarterly GDP drop of 6.2% when economic growth data is published on Friday.
"With so much hope hoisted onto China's shoulders to lead the world out of the COVID-19 recession, both data points are likely to cause strong market reactions," said OANDA's Jeffrey Halley.
China has largely brought the disease under control since it first emerged in the city of Wuhan late last year, following drastic measures that shuttered much of the economy and cordoned off tens of millions of people at the epicentre of the outbreak.
But the country faces a fresh battle against imported cases from overseas, mostly Chinese nationals returning home.
COMMENTS
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ