Oil steadies as supply woes counter virus fears

Saudi Arabia, US crude inventories likely to rise for fifth week

Oil steadied above $56 (Dh205.52) a barrel yesterday after two days of declines as Opec output cuts and Libyan supply losses balanced concerns about the spread of the coronavirus and its impact on oil demand.

Crude fell almost 4 per cent on Monday, with other commodities also posting losses while US and European equities suffered their steepest declines since mid-2016 on concern the coronavirus outbreak could

turn into a pandemic. Brent crude rose 5 cents to $56.35 a barrel by 0952 GMT. US West Texas Intermediate crude was down 14 cents at $51.29.

“Risk appetite appears to be growing again on the markets,” said Commerzbank analyst Eugen Weinberg. “However, the

Covid-19 virus and resulting risks to demand cannot be expected to disappear from the news any time soon.” Concern that the virus will spread and curb economic growth and oil demand has pushed down Brent crude by almost $10 a barrel this year despite the involuntary shutdown of most of Libya’s output as well as a supply pact between the Organisation of the Petroleum Exporting Countries (Opec) and its allies.

Prices received further support as lawmakers based in areas of eastern Libya controlled by military commander Khalifa Haftar on Monday said that they would not participate for now in peace talks with politicians allied to the internationally recognised government.

“Libyan peace talks appear to have taken a further blow with both sides announcing the end of their participation, pointing to lost crude volumes from the country carrying on for now,” JBC Energy analysts said.