Oil surged to $54 per barrel Tuesday, recovering from a 13-month low as the number of new coronavirus cases fell in China, easing some concerns about a lasting hit to oil demand.
The death toll crossed1,000 mark Tuesday, while the number of new confirmed cases dropped. The pandemic may peak in February and then elevate before easing, the Chinese authorities’ top medical adviser on the outbreak stated.
Brent crude climbed 82 cents to $54.09 per barrel. It plunged to $53.11 on Monday, the lowest since January 2019. U.S. West Texas Intermediate (WTI) crude was up 72 cents at $50.29.
Investors remain cautious that China’s oil demand could take a further hit if the coronavirus can’t be contained and if OPEC and its allies, referred to as OPEC+, fail to agree on new moves to offset prices.
The virus is already denting demand in the world’s second-largest oil importer. Chinese state refiners plan to cut up to 940,000 barrels per day (bpd), i.e., around 1% of world demand from their crude processing rates this month
Oil surged alongside a rally in global equities, which resumed their increase towards record highs Tuesday on hopes the virus is peaking. However, some analysts stated concerns around the virus and oil demand would seemingly resurface.
The OPEC+ along with Russia are limiting output by 1.7 million bpd in 2020 to support the market, and have been weighing an additional curb to stem the fallout from coronavirus.
An OPEC+ advisory board proposed a further lower of 600,000 bpd final week; however, Russia has delayed delivering its official position, irritating some OPEC members.
In a development that might add downward pressure on prices, U.S. crude inventories are anticipated to rise for a third consecutive week by 2.9 million barrels in the week ended on February 7.