(Bloomberg) Oil extended its recovery from a three-month low as U.S. industry data showed a drop in crude inventories, while traders continued to assess the threat to demand from China’s coronavirus.Futures rose 0.9% in New York to trade near $54 a barrel, bolstered after an American Petroleum Institute reported that nationwide stockpiles fell by 4.27 million barrels last week. Official government figures are due later on Wednesday.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 Jan. 27.
West Texas Intermediate for March delivery rose 42 cents to $53.90 a barrel on the New York Mercantile Exchange as of 8:18 a.m. New York time. The contract settled up 0.6% on Tuesday.
Brent for March settlement advanced 1% to $60.11 a barrel on the London-based ICE Futures Europe exchange.
U.S. 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 1.29 million-barrel increase in inventories ahead of the official Energy Information Administration data.
Oil-market news
The coronavirus is exacerbating a slide in diesel, which has been falling due to a mild winter and weak buying from the shipping industry. Yet prices are likely to rebound as supply concerns mount, JBC Energy said.
U.S. regulators are poised to issue long-delayed restrictions on excessive speculation in oil and metals markets after tougher proposals stalled during the Obama administration, said three people with direct knowledge of the matter.
The Trump administration will extend sanctions waivers allowing limited work on Iran’s civil nuclear program for another 60 days, two people familiar with the matter said.
Diesel exports from Russia’s Baltic port of Primorsk are set to rise to 1.747m tons in February, according to preliminary loading plan seen by Bloomberg.
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