Oil futures rose for a second day on Thursday boosted by potential OPEC+ action to counter oil demand loss from the coronavirus outbreak and by optimism that trade tensions between the world’s two biggest economies were easing.
A technical committee advising the Organization of the Petroleum Exporting Countries and its allies led by Russia, known as OPEC+, may reach consensus on Thursday on the need to further cut oil output by at least 500,000 barrels per day (bpd), two sources told Reuters.
The committee, which is not a decision-making body, is meeting for a third day in Vienna.
U.S. West Texas Intermediate (WTI) futures gained 69 cents to $51.44 a barrel after rising 2.3% on Wednesday.
Brent futures rose by 43 cents to $55.71 a barrel by 0942 GMT, having risen 2.4% in the previous session.
“Saudi Arabia seems ready to push for a very proactive and immediate production response,” bank RBC said in a note.
China on Thursday said it would halve additional tariffs levied against 1,717 U.S. goods last year, following the signing of a Phase 1 deal between the two countries.
This makes China’s goal to ramp up its U.S. purchases to $200 billion over the next two years more achievable,” JBC Energy said in a note.
Oil prices have slumped more than 20% since reaching their highest this year on Jan. 8 on demand concerns caused by the virus outbreak and indications of oversupply.
A technical market indicator known as the relative strength index, which measures buying and selling momentum, suggests that prices have fallen too far, too fast and investors may be buying futures in response.
In the last two days, commodities, equities and other markets have been buoyed by unconfirmed reports of a possible advance in producing treatment drugs for the coronavirus that has shut down transport and limited industrial activity in China.
However, the World Health Organization has played down the reports of “breakthrough” drugs being discovered.
A further 73 people on the Chinese mainland died on Wednesday from the virus, the highest daily increase since the outbreak started, and another 3,694 new cases were reported, raising the total to 28,018.
Commodity supply chains in China have been disrupted to the extent that short-term sales of crude oil, along with liquefied natural gas, fell to nearly zero this week.
While oil prices have gained in the past two days, the front month contracts of both Brent and WTI remain in contango , a situation where longer-dated futures trade at a premium to shorter dated ones, indicating the market sees ample supply or falling demand for crude.
(Additional reporting by Aaron Sheldrick in Tokyo; editing by Jason Neely)