Oil rebounds from three-month low
London, UK - Oil extended its recovery from a three-month low as US industry data showed a drop in crude inventories, while traders continued to assess the threat to demand from China’s coronavirus.
Oil futures rose 0.9 per cent in New York to trade near Us$54 a barrel on Wednesday, bolstered after an American Petroleum Institute reported that nationwide stockpiles fell by 4.27mn barrels last week. Official government figures are due later on Wednesday.
Brent crude for March settlement advanced 1 per cent to US$60.11 a barrel on the Londonbased ICE Futures Europe exchange.
Prices also strengthened in tandem with equities and other commodities. While the number of confirmed infections in China has overtaken the official number recorded during the 2003 SARS epidemic, it’s still unclear how severely world oil consumption will be affected.
“If strength in China’s demand isn’t there, then global demand growth will suffer very quickly,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich.
“But market fundamentals are still on track to tighten toward the middle of the year.”
Traders have also taken some reassurance from comments by Saudi Arabia and other OPEC members that they’re prepared to act to shore up the market. The alliance, which has already cut production, will consider prolonging curbs to the end of the year -- or even deepening them - - when it gathers in early March, a delegate said on January 27.
US crude stockpiles are currently at a three-month low after substantial declines in December. Contrary to the API figures, analysts surveyed by Bloomberg are forecasting a 1.29mn-barrel increase in inventories ahead of the official Energy Information Administration data.