NEW YORK - Oil prices rose 2.5% on Wednesday as demand worries eased with a slowing of new coronavirus cases in China and supply curtailed by a U.S. move to cut more Venezuelan crude from the market.
Brent crude LCOc1 was up $1.47, or 2.6%, at $59.22 a barrel by12:17 p.m. EST (1716 GMT). U.S. oil CLc1 was up $1.23 , or 2.4%, at $53.28 a barrel.
Official data showed new coronavirus cases in China fell for a second straight day, although the World Health Organization said there was not enough data to know if the epidemic was being contained.
“There’s more optimism that maybe this disease is peaking,” said Phil Flynn, an analyst at Price Futures Group in Chicago.
“The market is pricing in the possibility that we can get back to normal quicker, and that’s going to be very bullish for oil demand.”
Actions the Chinese government has taken, and is expected to take, to stimulate its economy and counteract the financial impact of the coronavirus also boosted oil prices, Flynn said.
China is expected to cut its benchmark lending rate on Thursday as it attempts to limit the damage from business shutdowns and travel curbs.
China, the world’s second-largest economy, has imposed city lockdowns and travel restrictions to contain the virus that has now killed more than 2,000 people.
S&P Global Ratings said it expected the virus would deliver a “short-term blow” to economic growth in China in the first quarter, echoing findings by the International Energy Agency.
The oil market price structure is also showing signs that prompt demand for oil is picking up, as the front-month Brent futures market is moving deeper into backwardation LCOc1-LCoc7, when near-term prices are higher than later-dated prices
This week, oil prices were also buoyed by a U.S. decision to blacklist a trading subsidiary of Russia’s Rosneft which President Donald Trump’s administration said provided a financial lifeline to Venezuela’s government.
Hopes that the Organization of the Petroleum Exporting Countries and allied producers would deepen supply cuts also supported prices.
The grouping, known as OPEC+, has been withholding supply to support prices and meets next month to decide a response to the downturn in demand resulting from the coronavirus epidemic.
But in the United States, which is not party to any supply cut agreements, oil production has been rising. U.S. shale production is expected to rise to a record 9.2 million barrels a day next month, the Energy Information Administration said.
