Oil prices gained following rebound in other financial markets as investors steady after a sharp sell-off on Monday. Fears on the effect of the virus outbreak on oil demand caused crude oil to drop to its lowest in over a year.
Brent crude gained 21 cents, or 0.4%, at $54.66 per barrel by 0227 GMT. US West Texas Intermediate crude rose 32 cents, or 0.6%, at $50.43 per barrel. Both are 20% down from its peak on Jan. 6.
Market analyst Margaret Yang of CMC Markets said that the rebound in oil prices was an indication of a better trading sentiment. Fears on the coronavirus spread briefly died down and the Asian equity market showed recovery from losses.
She added that recovery was underpinned by the OPEC+’s decision to extend supply cuts due to worries on lower outlook for oil demand. The OPEC+ were considering to cut oil production by 500,000 bpd due to the virus outbreak.
Despite the boost in today’s oil trading, Yang said that an even larger cut is possible if the situation worsens.