Oil prices rose more than 1% on Tuesday as recent sharp falls have encouraged investors holding short positions to book profits, but the market remains jittery over the Wuhan virus, which has now killed more than 1,000 in China.
Brent crude rose 79 cents, or nearly 1.5%, to $54.06 a barrel, while U.S. West Texas Intermediate was up 63 cents, or about 1.3%, to $50.20.
The number of coronavirus deaths on the mainland have now reached 1,016, China’s National Health Commission said, and the number of cases have topped 42,600.
The virus has also spread to two dozen other countries, with the head of the World Health Organisation cautioning on Monday that the cases outside of China could be “the spark that becomes a bigger fire”.
While the virus outbreak is hurting China’s economy – and others affected such as Japan and Singapore – San Francisco Federal Reserve Bank President Mary Daly, said the coronavirus impact on the U.S. economy has been limited.
Worries about the virus’s impact on oil demand, however, and rising U.S. oil supplies will likely cap price gains.
U.S. crude oil inventories were estimated to have risen by 2.9 million barrels in the week to Feb. 7, a preliminary Reuters poll showed on Monday, which would make it the third week in a row where stock levels have increased.
Oil supplies out of Brazil have also been growing, with Petrobras having hit a new production record in the last quarter of 2019 at more than 3 million barrels of oil equivalent per day.