A nascent rebound in oil prices ran into turbulence after China’s Hubei province reported almost 15,000 new coronavirus cases as it changed its method for counting infections.
The government of the province at the heart of the outbreak said it had carried out a review of past suspected cases and revised its data to include “clinically diagnosed” cases in its daily disclosure. The announcement spurred a drop in crude, which had risen almost 5% since Monday’s close on optimism that the virus was easing and the global economy would be spared a major slowdown. However, prices later clawed back some of their earlier gains.
The revised virus count may put more pressure on Russia to support an OPEC+ plan for additional output cuts to try and balance the market as demand craters due to the outbreak. In another sign of weakening consumption, the U.S. reported the biggest weekly jump in crude stockpiles in three months.
While oil prices have started to consolidate, a sharp rebound shouldn’t be expected, said Howie Lee, an economist at Oversea-Chinese Banking Corp. in Singapore. “The drawdown in Chinese demand for energy is still a problem for the market.”
West Texas Intermediate crude for March delivery rose 0.4% to $51.36 a barrel on the New York Mercantile Exchange as of 12:21 p.m. in Singapore. It was up as much as 1.5% earlier before falling by 0.5% after the virus figures were released. The contract advanced 2.5% on Wednesday.
Brent for April settlement added 0.1% to $55.87 a barrel on the ICE Futures Europe exchange in London on Wednesday after surging 3.3% in the previous session. The global benchmark crude traded at a $4.30 premium to WTI for the same month.
Source : Bloomberg