Crude oil prices inched up from 13-month lows Tuesday as the number of new coronavirus cases slowed in China, easing some concern over the potential for lengthy oil demand destruction, Kallanish Energy understands.
The death toll surpassed 1,000 Tuesday, while the number of new confirmed cases fell. The epidemic could peak in February and then plateau before easing, said the Chinese government’s top medical advisor on the outbreak.
Brent crude gained 78 cents, or 1.4%, to end the trading session at $54.05 per barrel. It fell to $53.11 on Monday, the lowest since January 2019. U.S. West Texas Intermediate crude gained 37 cents, or 0.75%, to settle at $49.94/Bbl.
Investors remain wary China’s oil demand could take a further hit if the coronavirus cannot be contained and if Opec+ members, which include most Opec members plus 10 non-Opec producers led by Russia, fail to agree on further steps to support prices.
The virus is already slowing demand in the world’s second-largest oil consumer. Chinese state refiners plan to cut as much as 940,000 barrels per day – almost 1% of world demand – from their crude processing rates in February.
The U.S. Energy Information Administration cut its global oil demand growth forecast for this year by 310,000 Bpd after the coronavirus outbreak.
Opec+ is restraining output by 1.7 million Bpd (Mmbpd) in the first three months of 2020, to support the market and have been considering further cuts. An Opec+ advisory panel last week proposed an additional cut of 600,000 Bpd, but Russia has delayed saying whether its is onboard.
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