- Brent, WTI rise by around 1%.
- Investors take stock as virus spreads.
Oil prices rose for a second day on Wednesday,Â recouping some losses after a five-day rout on talk that OPEC could extend oilÂ output cuts if a new coronavirus hurts demand, while data showing a decline inÂ U.S. stockpiles helped steady prices.
Financial markets that have been hit by the spread of the virus out of ChinaÂ are trying to assess the economic fallout, with the death toll rising to 132 andÂ airlines reducing flights to China.
“While the coronavirus continues to the spread both in and outside China theÂ market is trying to adjust positions across all asset classes,” said Saxo BankÂ analyst Ole Hansen.
“Commodities, most of which depend on global growth and demand, have beenÂ caught in the crosshairs of these developments … China (is) the world’sÂ biggest buyer of most commodities, from crude oil and fuel to copper and ironÂ ore.”
British Airways suspended all direct flights to and from mainland ChinaÂ after Britain warned against all but essential travel to the country, and jetÂ fuel demand has slumped in Asia as airlines have cancelled connections.
The Organization of Petroleum Exporting Countries wants to extend oilÂ production cuts until at least June from March, and may deepen the reductions,Â should demand for oil in China be significantly reduced by the spread of theÂ virus, OPEC sources said.
OPEC and its allies including Russia, have been trying to stabilise pricesÂ amid questions over the global demand outlook and rising supplies, particularlyÂ out of the United States.
“A further extension is a strong possibility and a deeper cut is aÂ possibility,” one OPEC source told Reuters. Any fallout of the China virus onÂ oil demand is likely to be clearer over the coming week, the source said.
In the United States, crude oil inventories fell by 4.3 million barrels lastÂ week, data from industry group the American Petroleum Institute showed onÂ Tuesday, compared with analysts’ expectations of a gain of 482,000 barrels.
Gasoline stocks were up by 3.3 million barrels, compared with forecasts in aÂ Reuters poll of a 1.3 million-barrel gain.
Distillate fuel inventories, which include diesel and heating oil, fell byÂ 141,000 barrels, against expectations of a 1 million barrel drop.Â
Official figures on oil and products are due out from the Energy InformationÂ Administration later on Wednesday.