Oil jumped more than 3% on Wednesday as traders eyed deeper production cuts from the Organization of the Petroleum Exporting Countries, and as China reported the lowest number of new coronavirus cases since the end of January, easing concerns about a drop-off in demand for oil.
On Wednesday U.S. West Texas Intermediate crude gained 2.6%, or $1.30, to trade at $51.24 U.S. per barrel, while international benchmark Brent crude rallied 3.1%, or $1.69, to trade at $55.70 U.S. per barrel. Earlier in the session WTI traded as high as $51.73 U.S. per barrel.
In a closely-watched monthly report published Wednesday, OPEC cut its forecast for oil demand growth this year, saying the coronavirus outbreak was the primary reason.
The cartel said it now expects 2020 daily oil demand growth to be 990,000 barrels per day (bpd), which is 230,000 bpd below prior forecasts.
This, in turn, could encourage OPEC and its allies, known as OPEC+, to implement additional production cuts.
On Tuesday night China’s National Health Commission said there were 2,015 confirmed new cases of the coronavirus on the mainland and 97 additional deaths, bringing the total numbers to 44,653 confirmed cases and 1,113 deaths.
Some of oil’s gains were cut down a mite, however, after the U.S. Energy Information Administration reported a larger-than-expected inventory build for the week ending Feb. 7. Stockpiles rose by 7.5 million barrels, ahead of the 3.2 million barrel build analysts had been expecting.