iStockphoto, Leonid Ikan
By Jane Chung, Dmitry Zhdannikov
LONDON (Reuters) – Oil prices rose 3% on Wednesday as China reported its lowest daily number of new coronavirus cases since late January, stoking investor hopes that fuel demand in the world’s second-largest oil consumer may begin to recover.
Brent crude was up $1.59, or 2.94%, at $55.60 per barrel at 1406 GMT. U.S. West Texas Intermediate (WTI) rose $1.17 a barrel, or 2.34%, to $51.10 a barrel.
According to data through Tuesday, the growth rate of new coronavirus cases in China has slowed to the lowest since Jan. 30. Still, international experts remained cautious over forecasting when the outbreak might peak.
“As the growth rate of new cases has decreased … that has improved the (market) sentiment,” said Kim Kwang-rae, commodities analyst at Samsung Futures in Seoul.
Travel restrictions to and from China and quarantines have cut fuel usage. The two biggest Chinese refiners have said they will reduce their processing by about 940,000 barrels per day (bpd) as a result of the consumption drop, or about 7% of their 2019 processing runs.
OPEC on Wednesday cut its forecast for global growth in oil demand due to coronavirus by 230,000 bpd – a fairly modest assessment compared to other forecasters. The U.S. government on Tuesday cut its growth forecast for this year by 310,000 bpd.
The demand concerns from the outbreak pushed Brent and WTI to their lowest in 13 months on Monday. Both benchmarks are down more than 20% from highs reached in January.
On the supply side, the Organization of the Petroleum Exporting Countries has recommended a further cut of 600,000 bpd last week to stem the oil price fall. OPEC is now waiting for a response from ally Russia whether Moscow would help execute the cuts.
“Clearly, the ongoing developments in China require continuous monitoring and assessment,” OPEC said.
Russian energy minister was due to meet local oil producers later on Wednesday to discuss cuts.
U.S. crude inventories rose by 6 million barrels in the week to Feb. 7 to 438.9 million barrels, beating analysts’ expectations for an increase of 3 million barrels, data from industry group the American Petroleum Institute showed.
Official EIA data was just released at 10:30am ET showing U.S. crude oil refinery inputs averaged 16.0 million bpd during the week
ended February 7, 2020, 48,000 bpd more than the previous
Additional reporting by Jane Chung; Editing by Kenneth Maxwell and Elaine Hardcastle.