SINGAPORE (Reuters) – Oil prices jumped on Friday following sharp losses this week, as the World Health Organization (WHO) came out against travel and trade restrictions in declaring a global emergency over the spread of a coronavirus that originated in China last year.
FILE PHOTO: Oil pump jacks work at sunset near Midland, Texas, U.S., August 21, 2019. REUTERS/Jessica Lutz
Oil prices fell nearly 4% through Thursday this week – hitting three-months lows – before rebounding on Friday, with investors and traders worried over how spread of the virus would impact demand for oil and its products.
“WHO’s decision … to oppose restricting travel and trades against China boosted market confidence, even though the organization declared a global health emergency,” said Margaret Yang, market analyst at CMC Markets.
Brent crude futures LCOc1 jumped $1.16 to $59.45 a barrel by 0532 GMT, after falling 2.5% the previous session. Brent is still down 2% for the week.
U.S. West Texas Intermediate (WTI) futures CLc1 were up by $1.06 to $53.20 a barrel. The contract fell 2.2% on Thursday and is now 1.8% lower for the week.
The WHO on Thursday declared that the coronavirus outbreak in China – which has killed more than 200 people there and has spread to some 18 countries – now constitutes a public health emergency of international concern.
Despite the rebound in prices on Friday, analysts remained cautious and warned of further downside risks if the virus continues to spread.
“Oil’s January correction, a 13% drop to be exact, was ripe for a bounce,” said Edward Moya, senior market analyst at OANDA in New York.
“Oil is likely to remain vulnerable despite today’s optimism that the coronavirus has likely been contained,” he said.
Italy’s government decided to halt all air traffic between Italy and China, and airlines including Air France, American Airlines and British Airways have stopped flying to Chinese cities.
“An escalation in alert levels around the world will likely curb demand travel and thus energy,” said CMC’s Yang.
Driven largely by a drop in Chinese domestic and international transport activity, world oil demand was adjusted lower by 500,000 barrels per day in the first quarter of 2020, according to estimates from Wood Mackenzie consultant Yujiao Lei.
Prices were also buoyed by reports that Saudi Arabia has opened a discussion about moving an upcoming output policy meeting to early February from March following the recent slide in oil prices.
Reporting by Roslan Khasawneh; Editing by Tom Hogue