Crude futures rise amid cautious optimism over coronavirus

Singapore — Crude oil futures were higher in mid-morning trade in Asia Wednesday on cautious optimism stemming from latest developments in the coronavirus outbreak and OPEC+ production cut proposal.

At 10:30 am Singapore time (0230 GMT), April ICE Brent crude futures were up 83 cents/b (1.54%) from Tuesday's settle at $54.84/b, while the NYMEX March light sweet crude contract was 55 cents/b (1.1%) higher at $50.49/b.

The World Health Organization late Tuesday said the number of confirmed coronavirus or Covid-19 cases has risen to 43,107 but the rate of new cases has slowed to around 2,500/day from 3,900/day on February 4.

"Brent prices appear to have stabilized around the $53-$55/b consolidation region for now as market participants assess if further downside is warranted from the Covid-19 situation," OCBC analysts said in a note Wednesday.

"Any upside would hinge on Russia accepting the OPEC+ proposal to cut a further 600,000 b/d across the bloc," they added.

Russian energy minister Alexander Novak said Tuesday that Russia is still studying a recommendation by the OPEC+ technical committee last week on a response to the coronavirus.

"The crude oil price gained as hopes of another supply cut by OPEC rose... In the meantime, concern over weak demand in China is forcing many producers to look for alternatives," ANZ analysts said in a note Wednesday.

The US Energy Information Administration has cut its outlook for China's liquid fuel demand to 14.8 million b/d for February-April, down 400,000 b/d from last month's outlook.

While EIA projecting global oil supply to continue to outpace demand in 2020, it lowered its forecasts for both production and consumption due mainly to the impact of the coronavirus outbreak in China.

As of 0230 GMT, the US Dollar Index was up 0.04% at 98.725.