Oil prices sank about 1 per cent on Tuesday as fears that energy demand would take a long-term hit from the growing coronavirus outbreak outweighed hopes for more production cuts from OPEC and its allies.
Brent crude oil futures ended Wednesday's trading session up $1.32, or 2.5%, at $56.46 a barrel, while U.S. West Texas Intermediate crude gained $1.14, or 2.3%, to settle at $50.75/Bbl.
Reuters reported Monday that the Organization of the Oil-Exporting Countries (OPEC) and its allies, a group known as OPEC +, are considering a further 500,000 GDP to reduce their oil production in the wake of reduced Chinese demand.
On Tuesday, the OPEC+ Joint Technical Committee was joined by China's ambassador to global organizations for the meeting in the Austrian capital.
Oil prices jumped by four per cent on Wednesday on media reports that scientists had developed a drug against the fast-spreading coronavirus, an outbreak that continues to weigh heavily on global economic activity and oil demand.
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Some members of the coalition, which includes 13 OPEC nations and 10 producers, haven't given up on a possible output cut, officials said.
The meeting of the technical committee at OPEC delivered a strong recommendation in favour of taking another 600,000 barrels a day off the market. Oil prices have dropped more than 20% since peaking on January 8th.
Russian energy minister Alexander Novak, said Friday the crisis could lead to lower demand for hydrocarbon fuels.
The US benchmark oil contract, WTI, has fallen by around 18 percent over the past month.
The world's biggest oil producers are said to be discussing more production cuts, that have been in place since 2016, to boost falling prices.
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The OPEC+ ministers have yet to decide on whether to bring forward their upcoming policy meeting to February from March 5-6, the sources said.
Speaking on Bloomberg TV, the global head of commodities research, Jeff Currie said the difference between any other virus is "the magnitude of the quarantine, with demand down anything from two to three million barrels a day in China".
"It is widely anticipated that the Chinese oil import, which was sitting at almost 11 mbpd (million barrels per day) at the start of this month, is going to see significant weakness".
OPEC+ members are in the midst of cutting 1.7 million bpd, up from 1.2 million past year, as part of a deal reached in December.
"Even before coronavirus, demand numbers in the USA were pretty bleak, and now the seasonal downturn in demand is enhanced by what we are seeing out of China", he said.
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