Conflict in Libya that has led to a blockade of its ports and oilfields shows no signs of a resolution, while U.S. sanctions on a subsidiary of Russian state oil major Rosneft could cut more Venezuelan crude from the market, rekindling global oil supply worries.
West Texas Intermediate (WTI) crude futures climbed 59 cents, or 1.1%, to $54.11 per barrel.
Brent crude futures were up 14 cents, or 0.2%, to $59.44 a barrel by 0505 GMT, after climbing to as high as $59.71 earlier in the day. The international benchmark rose 2.4% on Wednesday.
“The supply disruptions are helping to alleviate the virus impact, but it is probably premature to think the worst of the economic impact is by and large over,” said Stephen Innes, chief market strategist at AxiCorp.
Brent crude may extend its gains to $60.22 per barrel, as suggested by its wave pattern and a projection analysis, according to Reuters technical analyst Wang Tao.
Libya’s internationally recognised leader Fayez al-Serraj dashed hopes of reviving peace negotiations on Wednesday after the Libyan National Army (LNA) of Khalifa Haftar shelled the port of the capital, held by al-Serraj’s government. The ongoing conflict has cut oil exports by 1 million barrels per day (bpd).
“The oil market is starting to realize that as bad as the demand destruction is from the coronavirus, the lack of exports from Libya might be meeting the oil demand destruction barrel for barrel,” said Phil Flynn, an analyst at Price Futures Group in Chicago.
China’s move to cuts its benchmark lending rate on Thursday also helped to ease worries about demand destruction in the world’s second-biggest oil consumer and its largest crude oil importer.
China reported 349 new confirmed cases in Hubei province on Wednesday, the lowest in more than three weeks, while death toll rose by 108, down from 132 the previous day.
Meanwhile, U.S. industry data showing a bigger-than-expected build in crude oil inventories helped to cap the price gains.
U.S. crude stocks rose by 4.16 million barrels in the week to Feb. 14, compared with analyst expectations for a build of 2.5 million barrels, data from industry group the American Petroleum Institute showed on Wednesday.