Oil futures moved up on Tuesday, finding support as OPEC is reportedly considering an extension to its cuts in crude production, a day after prices ended at a more than three-month low on fears China’s coronavirus outbreak could dent global demand for crude.
Reuters reported Tuesday, citing OPEC sources, that the Organization of the Petroleum Exporting Countries wants to extend their current oil-output cuts until at least June.
The group also reportedly raised the possibility of deeper cut if oil demand in China is significantly curtailed by the coronavirus. OPEC and its allies, which include Russia, reached an agreement in December to reduce output from January through March of this year by 1.7 million barrels a day from October 2018 levels.
Against that backdrop, West Texas Intermediate crude for March delivery CLH20, +0.92% on the New York Mercantile Exchange rose 67 cents, or 1.3%, to $53.81 a barrel, while March Brent crude BRNH20, +0.61% was up 51 cents, or 0.9%, at $59.83 a barrel on ICE Futures Europe.
Both grades ended Monday at their lowest level since October as investors sold assets perceived as risky, including most commodities and equities, amid worries over the spread of the viral outbreak.
Fears the epidemic could slow global economic growth and dent demand served to amplify unease over the supply-and-demand balance. WTI, the U.S. benchmark, has tumbled more than 12% so far in January, while Brent is off more than 10% over the same stretch.
“Financial markets have thus far avoided the same magnitude of losses seen in outright oil prices over the last week or two, however, signaling a broader readiness to sell off oil in a market still dogged by broader demand concerns,” wrote analysts at JBC Energy, a Vienna-based consulting firm, in note. “Thus far the demand impact is likely limited to China, although recent reports suggest domestic travel may have fallen by almost 40% [year-over-year] at the beginning of the current holiday period.”
Chinese authorities on Tuesday said deaths from the viral disease rose by 25 to at least 106, while the number of confirmed cases in China rose to 4,515.
China’s already weakening economy is set to take another hit with businesses across the country remaining shut for an extended public holiday and tourism grinding to a halt, as authorities struggle to contain the pneumonialike coronavirus that has spread across the nation, the South China Morning Post reported.
March natural-gas futures NGH20, +2.29% added 1.8% at $1.935 per million British thermal units.