Oil markets calmed on Wednesday after Saudi gave assurances that it had revived 41% of capacity Image Credit: Reuters

NEW YORK: Oil futures edged up on Tuesday after falling for five days, bouncing up with Wall Street, and crude also drew support from talk that Opec and its allies might tighten the market amid fears the coronavirus could weigh on oil demand.

“WTI is correlating to US equities, which are stronger,” said Bob Yawger, director of energy futures at Mizuho in New York. Stronger equities can indicate economic strength and, therefore, a better demand outlook for crude.

US stocks rose as gains in technology and financial shares helped major indexes recover from their biggest sell-off in about four months on worries over a coronavirus outbreak and its possible impact on global growth.

“There are folks who think ‘if the equities are ripping, how bad can demand be,’” Yawger said.

Brent futures rose 45 cents, or 0.8 per cent, to $59.77 a barrel by 11:12am. EST (1612 GMT). US West Texas Intermediate (WTI) crude rose 41 cents, or 0.8 per cent, to $53.55.

On Monday, both contracts dropped to their lowest since October, on track for their biggest monthly declines since May.

Those moves come ahead of a report from the American Petroleum Institute (API) at 4:30pm. EST expected to show a 0.5 million barrel build in US crude stocks last week.

President Xi Jinping said China was sure of defeating a “devil” coronavirus that has killed 106 people and spread across the world, rattling financial markets.

Still, the virus has been detected in more than a dozen countries, and the United States and other countries warned against travel to China.

Oil investors worry the outbreak could dampen energy demand against a backdrop of plentiful crude supply.

Barclays said it saw a $2 per barrel downside to its full-year Brent and WTI forecasts of $62 and $57, respectively.

Opec, Libya help to curb losses

On Monday, Saudi Arabia, de facto leader of the Organization of the Petroleum Exporting Countries (Opec), sought to calm market jitters, urging caution against gloomy expectations on the impact of the virus on global oil demand.

Opec officials have also started weighing options such as extending current oil output cuts until at least June, with the possibility of deeper reductions if oil demand in China is heavily hit by the virus, Opec sources said.

Meanwhile, Libyan output has fallen nearly 75 per cent to just below 300,000 bpd amid the most extensive oil blockade for years.