Some experts warn that concerns of economic impact are overblown: File Image/PixaBay
A rebound in Wall Street Stocks - always supportive of crude prices - was credited along with the Organization of the Petroleum Exporting Countries (OPEC) for distracting traders from coronavirus headlines and modestly bumping up oil futures on Tuesday.
Gains in technology and financial shares caused U.S. stocks to rise, and correspondingly Brent rose 19 cents to $59.51 per barrel, while West Texas Intermediate gained 34 cents to $53.48.
Traders also took heart in OPEC officials reportedly starting to consider extending their output cuts until at least June and even deepening them if crude demand in China is heavily affected by the virus.
Vandana Hari, founder and CEO, Vanda Insights
Fear and panic will probably not die down anytime soon
Meanwhile, OPEC members such as Saudi Arabia, the United Arab Emirates, Algeria, and Oman urged crude market players to avoid gloomy expectations on the impact of the virus on the global economy and oil demand.
It has also been said that although Russia initially wanted to abandon the crude cuts, it too will stay the course of output reduction if oil prices continue to trade below $60 per barrel.
Finally, while media over the past week has compared the coronavirus's potential to create havoc with the 2003 sell-off caused by the outbreak of severe acute respiratory syndrome (SARS), Vandana Hari, founder and CEO of energy markets consultancy Vanda Insights, said the comparison "is based on a lot of fear and panic" and that the "fear and panic will probably not die down anytime soon."
Hari went on to remark that she doesn't see upside catalysts for oil "at all" given that the recent U.S./China trade deal failed to trigger a major commodities comeback and that the dying down of U.S./Iran hostilities has also contributed to bearish sentiment.
However, she theorized that OPEC and its allies could "put a floor" under prices.