Oil prices rise as new virus cases slow, easing Chinese demand concerns
SEOUL (Reuters) – Oil prices rose for a second day on Wednesday amid preliminary signs that new coronavirus cases are slowing in China, easing concerns over the demand impact from the disease in the world’s second-largest oil consumer.
Brent crude LCOc1 was up 73 cents, or 1.3%, at $54.75 per barrel at 0137 GMT. U.S. West Texas Intermediate (WTI) CLc1 rose 46 cents, or 0.9%, to $50.39.
According to data through Monday, the growth rate of new coronavirus cases in China has slowed to the lowest since Jan. 31.
Bans on travel to and from China and on the movement of goods inside the country have cut fuel usage. The two biggest Chinese refiners have said they will reduce their processing by about 940,000 barrels per day (bpd) as a result of the consumption drop, or about 7% of their 2019 processing runs.
“Concern over weak demand in China is forcing many producers to look for alternatives,” ANZ Research said in a note. “Companies such as Vitol, Shell and Litasco have been preparing to hire supertankers to store crude that would be otherwise destined for China.”
China’s senior medical advisor said on Tuesday the outbreak may be over by April.
The demand concerns from the outbreak pushed Brent and WTI to their lowest in 13 months on Monday. Both benchmarks are down more than 20% from highs reached in January.
The U.S. Energy Information Administration (EIA) on Tuesday cut its global oil demand growth forecast for this year by 310,000 bpd as the virus outbreak crimps oil consumption in China, the world’s second-largest economy.
On the supply side, the Organization of Petroleum Exporting Countries (OPEC) and its allies including Russia, known as OPEC+, recommended a further cut of 600,000 bpd last week to stem the oil price fall.
However, Russia has been hesitant to commit to the additional cut, while Saudi Arabia wanted global major oil producers to agree a quick oil supply cut.
U.S. crude inventories rose by 6 million barrels in the week to Feb. 7 to 438.9 million barrels, beating analysts’ expectations for an increase of 3 million barrels, data from industry group the American Petroleum Institute showed late on Tuesday.