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Oil futures rose Wednesday, boosted by hopes a slowdown in the number of new, confirmed cases of COVID-19 in China would translate into a smaller-than-feared hit to crude demand.
West Texas Intermediate crude for March delivery CLH20, +1.66% on the New York Mercantile Exchange rose 78 cents, or 1.6%, to $50.72 a barrel, while April Brent BRNJ20, +2.09%, the global benchmark, was $1.12 higher, at $55.13 a barrel, a rise of 2.1%.
“The energy patch is bid this morning as the coronavirus gives the impression the situation is getting better. Products are leading the rally this morning,” said Robert Yawger, director of energy at Mizuho Securities U.S.A. in a note.
China’s National Health Commission on Wednesday said 2,015 new cases of the disease caused by a new strain of coronavirus that emerged in Wuhan, China, in late 2019, had been reported over the last 24 hours, declining for a second day. That brought the number of cases in mainland China to 44,653, although experts have warned that a substantial number may have gone uncounted. The commission said there were 97 additional deaths from the virus in the last 24 hours, bringing the mainland total to 1,113.
Analysts noted that experts have cautioned against making early predictions about a peak in infections, but optimism over signs of a slowing spread had also helped buoy crude on Tuesday.
Meanwhile, the Organization of the Petroleum Exporting Countries on Wednesday cut its forecast for 2020 global crude demand growth by 230,000 barrels a day to 990,000 barrels a day, citing the impact of COVID-19.
Crude was also holding gains despite expectations for a rise in U.S. inventories. The American Petroleum Institute late Tuesday estimated crude inventories rose 6 million barrels in the week ended Feb. 7, according to sources, along with a 1.1 million barrel increase in gasoline stockpiles and a 2.3 million barrel fall in distillate stocks.
More closely watched storage figures from the Energy Information Administration are due later Wednesday morning. Analysts polled by S&P Global Platts expect the report to show crude inventories rose by 2.3 million barrels last week, with gasoline inventories forecast to rise 700,000 barrels and distillate inventories dropping 900,000 barrels.
March gasoline futures RBH20, +2.77% rose 3% to $1.5603 a gallon, while March heating HOH20, +1.97% was up 2% at $1.6587 a gallon.
March natural gas NGH20, +2.01% gained 2% to trade at $1.822 per million British thermal units.
