(Bloomberg) — Oil rebounded from its lowest level since mid-October as investors weighed the extent to which China’s coronavirus would hurt fuel demand.
Futures recovered 0.6% in New York on Tuesday after losing more than 9% across five straight days of declines. Investors found comfort in the possibility of the Organization of Petroleum Exporting Countries and its allies extending and deepening production cuts at its March meeting to stave off any supply imbalances if the coronavirus outbreak worsens.
There’s some short-covering “after the worst-case demand scenario got priced in,” said John Kilduff, a partner at Again Capital LLC in New York. Sentiment improved after the sell off captured the attention of Saudi Arabia and China ramped up efforts to contain the outbreak, he said. “They’ve shown the market they’re not going to take this lying down.”
Chinese authorities have locked down cities with a combined 50 million people around the outbreak’s epicenter in Wuhan, and will stop individuals traveling to Hong Kong. Fatalities increased to 106 in China, and infections have been reported throughout Asia as well as in the U.S., France, Canada and Germany. The U.S. Centers for Disease Control and Prevention advised travelers to avoid all non-essential trips to China.
China’s expanded efforts to contain the outbreak coupled with the response from Saudi Arabia, the world’s biggest oil exporter, acted as “a support to prices and a recognition that demand could be lower going into the second quarter,” said Marshall Steeves, energy analyst at IHS Markit.
West Texas Intermediate for March delivery rose 34 cents to $53.48 a barrel on the New York Mercantile Exchange. The U.S. benchmark has lost 12% so far in January, set for the biggest monthly decline since May.
Brent for March settlement rose 19…
Source: FuelFix
