Major crude futures prices returned to gaining ways by 3 percent on Wednesday as the Organization of the Petroleum Exporting Countries (OPEC) and its producer allies are considering further output cuts to counter the effect of the coronavirus on global oil demand.
As at Wednesday night, the Brent crude was trading up by $1.66 or 3.08 percent to $55.64 per barrel, while the US West Texas Intermediate crude was up by $1.55 or 3.12 percent to settle at $51.16 per barrel.
The OPEC+ joint technical committee on Tuesday weighed the effect of the coronavirus outbreak on demand loss as OPEC and its allies are struggling to contain the oil market.
According to reports, the OPEC+ panel did not discuss cuts on Tuesday, but will do that into the second half of the meeting on Wednesday. It was hinted that there were concerns that OPEC’s largest producer, Saudi Arabia, was pushing for more cuts, while Russia, the leader of the non-OPEC group of producers part of the deal, was pushing back.
There are considerations of pushing for an additional cut of at least 500,000 barrels per day and even 1 million barrels daily to return the market to stability and also stop oversupply.
OPEC and some non-OPEC allies such as Russia have been curbing production by 1.7 million barrels after signing an agreement to prevent an oil glut and support oil prices above $60 per barrel in December with the deal set to expire in March but with the latest development, the market may see some extra measures from the alliance.
On Wednesday, prices held gains even after data showed that US crude inventories rose by 3.4 million barrels in the week to January 31.
Also believed to have helped the market were reports that a team of researchers in China had found that drugs Abidol and Darunavir can limit the virus. It was also reported that a British scientist had made a significant breakthrough in the race for a vaccine by reducing part of the normal development time from two to three years to only 14 days.
However, the World Health Organization (WHO) played down the media reports, saying there were no known effective cure against the virus yet.
The latest numbers showed that death toll from the coronavirus outbreak in has risen to 490, with 24,324 people infected, and almost 30 countries affected.
