WTI bulls firm-up in Asia following strong Evergrande sell-off

• US oil was pressured in a risk-off start to the week. 
• Evergrande sank the stock markets on a global scale.
• S Gulf output will stay offline for months due to storm damage.

The price of oil on Tuesday is up to some 0.16% between $70.39 and $70.57 after losing ground on Monday by over 2% as investors grew more risk-averse.

Chinese property developer Evergrande's solvency is in the balance and markets are on edge, especially the commodities complex due to the implications of a property market crash in China. 

''While slowing Chinese economic growth and uncertainty around the Fed’s tapering timetable weighed on market sentiment, other developments still point to higher oil prices,'' analysts at ANZ Bank argued. 

''Rising gas and coal prices, due to the supply shortage, are gradually encouraging utilities to switch from gas and coal to fuel oil. Sweden has started up oil-fired power plants. Oil demand will get a fresh boost from the US’s announcement that the travel ban would be lifted for foreign travellers who are fully vaccinated from November. This could see jet fuel demand recovering strongly towards the end of this year,'' the analysts said. 

Meanwhile, the US dollar has picked up a safe haven bid as the global stock market rout sends flows into the greenback which means oil gets more expensive for non-dollar markets. This, in turn, has weighed on the price of oil in a bearish move backed by the stock market itself.

Stock market rout weighs on oil

Wall Street collapsed on Monday as fear of contagion from a potential collapse of China's Evergrande prompted a broad sell-off and sent investors fleeing equities for safety.

All 11 major S&P 500 sectors were lower, with economically sensitive groups like energy down the most. The S&P 500 is down heavily from its intra-day record high hit on Sept. 2 and is on track to snap a seven-month winning streak this month.

Unofficially, the Dow Jones Industrial Average lost620.22 points, or 1.79%, to 33,964.66. The S&P 500 dropped 75.28 points, or 1.70%, to 4,357.71. The Nasdaq Composite dropped 325.95 points, or 2.17%, to 14,718.02.

• US Stocks Forecast: A bad situation just got worse, but bullish prospects on the horizon

So not a good day on Wall Street, however, oil drew some support from signs that some US Gulf output will stay offline for months due to storm damage.  As of Friday producing companies had just 23% of crude production offline or 422,078 barrels per day.

''US oil producers are struggling to restore production,'' analysts at ANZ Bank said. ''Royal Dutch Shell said oil production from the Mars and Ursa platforms in the Gulf of Mexico will be offline until the end of 2021. This would reduce supply by nearly 300,000 barrels, according to Bloomberg calculations.''