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Oil rises on short-covering despite growing fears over coronavirus
Crude prices edged up on Wednesday as investors covered short positions after three sessions of losses, even as fears deepened that the rapid spread of the coronavirus will lead to a global pandemic.Brent crude rose 42 cents, or 0.8%, to $55.37 a barrel by 0154 GMT, while U.S. West Texas Intermediate crude gained 43 cents, or 0.9%, to $50.33 a barrel. Still, both benchmarks are down nearly 7% since last Thursday’s close.Fears of a pandemic escalated after the coronavirus spread to more countries, while Iran’s virus death toll rose to 16, the highest outside China, and infections worsened in South Korea and Italy.
In the United States, the Centers for Disease Control and Prevention said Americans should prepare for possible community spread of the virus.”Investors unwound short positions after WTI dipped below a key support level of $50, as they have done a few times earlier this month,” said Hideshi Matsunaga, analyst at Sunward Trading.”The reduction in Libya’s output and expectations for additional production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and OPEC+ are also lending support,” he said.Oil output in Libya has fallen sharply since Jan. 18 because of a blockade of ports and oil fields by groups loyal to eastern-based commander Khalifa Haftar.OPEC and its allies including Russia, a group known as OPEC+, are due to meet in Vienna over March 5-6.Saudi Arabia’s energy minister said on Tuesday he was confident that OPEC and its partners would respond responsibly to the spread of the coronavirus.