Tuesday, March 03, 2020 / 3:45 PM / Reporting By Jane Chung and Florence Tan of Reuters / Header Image Credit: Nigerian News Direct
Oil prices rose for a second day on Tuesday on
expectations that central banks are likely to enact financial stimulus to
offset the impacts of the coronavirus outbreak and growing optimism that OPEC
will order deeper output cuts this week.
Brent crude LCOc1 rose $1.26 per barrel, or 2.4%,
to $53.16 per barrel by 0410 GMT. U.S. West Texas Intermediate (WTI) CLc1 rose
$1.24, or 2.7%, to $47.99 a barrel.
Brent and WTI have rebounded somewhat over the past
two days from a more than 20% drop from their 2020 peak in January that was
caused by signs the coronavirus spread has dented fuel demand.
Since Friday, WTI has gained 7.2% while the
front-month Brent contract has climbed 7%, the biggest two-day percentage gains
for both contracts since prices snapped back after the missile attacks on Saudi
Arabian oil facilities in September 2019.
"Oil prices got their groove back after the
world's largest economies signalled they will be united in fighting off the
economic impact of the coronavirus and on the Russian capitulation in agreeing
to deliver deeper production cuts at this week's meeting," said Edward
Moya, senior market analyst at OANDA.
G7 finance ministers will also discuss this week
how to best to cushion the impact of the outbreak on economic growth, French
Finance Minister Le Maire said on Monday. That is occurring as other major
central banks have promised monetary and fiscal stimulus.
The coronavirus, which originated in China, has
spread to more than 60 countries and has killed over 3,000 people globally.
"The coronavirus is still spreading globally
and until markets can possibly calculate a return of normal travel and trade,
oil will struggle," Moya said.
With lingering worries over oil demand amid the
virus outbreak, several key members of the Organization of the Petroleum
Exporting Countries (OPEC) are mulling a bigger oil output cut of possibly 1
million barrels per day (bpd). The previous proposal was for an additional
reduction of 600,000 bpd.
OPEC and its allies, a group known as OPEC+, are
expected to announce deeper output cuts at their meeting on March 5-6 in
Vienna. The group had agreed to cut output by 1.7 million bpd in a deal that
runs to the end of March.
Singapore-based analyst Margaret Yang at CMC
Markets said the gradual resumption of business activities in China has also
supported oil prices.
Brent has found strong technical support at $51 a
barrel while immediate resistance levels are at $54.70 and $57.20 a barrel, she
added.
Oil stockpiles in the United States, the world's
biggest crude producer and consumer, are expected to rise for a sixth week by
3.3 million barrels, while refined product inventories are forecast to fall,
according to Reuters poll.
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