Oil ends higher as investors see slowdown in new coronavirus cases - MarketWatch

Oil futures settled with a gain on Tuesday to recoup some of the losses seen a day earlier when they posted their lowest settlement in more than a year.

Analysts tied gains to a slowdown in the number of new cases in China of COVID-19, the disease caused by the coronavirus that emerged in the country late last year.

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 will agree to an additional output cut in response to the viral outbreak.

West Texas Intermediate crude for March delivery CLH20, +1.36%  on the New York Mercantile Exchange rose 37 cents, or nearly 0.8%, to settle at $49.94 a barrel, while April Brent crude BRNJ20, +1.83% tacked on 74 cents, or 1.4%, to $54.01 a barrel on ICE Futures Europe. Oil has tumbled sharply in 2020, slipping into a bear market last week, on rising concerns over the COVID-19 outbreak. Prices for both benchmarks settled Monday at their lowest in over a year.

“Although the number of coronavirus cases and fatalities continues to climb, the percentage growth rate of cases has slowed,” contributing to a rise in oil prices, said Colin Cieszynski, chief market strategist at SIA Wealth Management.

“Press reports indicate China’s government has suggested this outbreak could reduce GDP growth by about 1% and that the government is taking additional steps to mitigate the economic impact, which has eased investor fears and boosted investor confidence,” he said in a daily note.

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+ recommendation 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.

Prices for U.S. benchmark WTI crude futures pared some of their earlier gains after a monthly short-term energy outlook report from the Energy Information Administration released Tuesday revealed lower 2020 forecasts for WTI and Brent crude oil prices. The EIA also reduced its expectations for U.S. crude-oil production.

Separately, the EIA’s weekly data on U.S. petroleum supplies will be released Wednesday, following a similar inventory report from trade group the American Petroleum Institute late Tuesday.

Analysts polled by S&P Global Platts expect the EIA data to reveal a climb of 2.3 million barrels in crude supplies, on average, for the week ended Feb. 7. They also forecast a climb of 700,000 barrels in gasoline stocks, but expect distillate stockpiles to show a decline of 900,000 barrels.

Monthly oil reports from OPEC and the International Energy Agency will be released on Wednesday and Thursday, respectively.

In other energy trading, March natural gas NGH20, +0.45%  added nearly 1.3% to $1.788 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, +1.46%  fell 0.5% to $1.5142 a gallon, while March heating oil HOH20, +1.31%  added 0.9% at $1.6267 a gallon.

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Oil ends higher as investors see slowdown in new coronavirus cases - MarketWatch
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