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Oil futures bounced higher Tuesday, with analysts tying support to a slowdown in the number of new coronavirus cases in China.
Worries remain, however, over how the outbreak will affect crude demand, amplified by uncertainty over whether the Organization of the Petroleum Exporting Countries and its allies, particularly Russia, will agree to an additional output cut in response to the viral outbreak.
West Texas Intermediate crude for March delivery CLH20, +1.88% on the New York Mercantile Exchange rose 77 cents, or 1.6%, to $50.34 a barrel, while April Brent crude BRNJ20, +2.14% was up $1.03, or 1.9%, to $54.30 a barrel. Oil has tumbled sharply in 2020, slipping into a bear market last week, on rising concerns over the coronavirus.
“In early trading this morning, WTI is attempting a modest rebound, although the major trend remains bearish,” said Carlo Alberto De Casa, chief analyst at ActivTrades, in a note. “It seems quite clear that investors are still cautious about taking any long position on oil as the impact of the coronavirus is unclear and could have a huge impact on oil demand.”
China’s National Health Commission on Tuesday said in its daily update that 108 deaths were reported in the previous 24 hours, bringing the total to 1,016 deaths in mainland China since the disease emerged in December. The number of new, confirmed cases fell to 2,478 from 3,062 a day earlier, bringing the total to 42,638 on the mainland, including some of whom have since recovered and been released from treatment.
Traders were also looking for signs as to whether Russia will go along with an OPEC+ proposal to curb oil output by an additional 600,000 barrels a day. Russia’s hesitation in endorsing the proposal was blamed in part for pressure on crude prices Monday.
Meanwhile, a larger meeting of OPEC+ remains scheduled for March 5-6, stoking concerns that producers are “waiting too long to take action in the wake of the demand impact from the coronavirus,” said Warren Patterson, head of commodities strategy at ING, in a note.
In other energy trading, March natural-gas futures NGH20, +0.40% were up 0.1% at $1.768 per million British thermal units. The heating fuel fell by 5% Monday to its lowest close in almost four years, pressured by milder-than-usual winter weather that has limited demand.
March gasoline RBH20, +0.60% rose 0.5% to $1.5296 a gallon, while March heating oil HOH20, +1.46% was up 1% at $1.6279 a gallon.
