By Adedapo Adesanya
Oil prices bounced back to gaining ways on Tuesday despite the market being affected by low demand resulting from the coronavirus spread in China and other countries, restricting movement and economic activities.
It was observed that speculations that a group oil producers known as the Organisation of the Petroleum Exporting Countries (OPEC) was considering an extension to cut in crude production pushed prices up yesterday at the market.
Consequently, the Brent crude futures, which is the global benchmark, gained 21 cents or 0.36 percent to trade at $58.79 per barrel, while the US West Texas Intermediate (WTI) crude futures moved up 34 cents or 0.64 percent to settle at $58.73 per barrel on Tuesday night.
The market has been faced by low demand caused by the SARS coronavirus which originated from the Chinese city of Wuhan and has since killed over 105 people and affected more than 4,500 people globally, pulling down prices of the commodity as people were warned not to travel or go to work as a preventive measure in China, while panic also grew.
However, OPEC wants to extend current oil output cut until at least June, with the possibility of deeper reductions on the table if oil demand in China is significantly impacted by the spread of a new coronavirus.
This lifted crude prices which had fallen more than five days of losses up, as the cartel may extend its decision to reduce oil supply from producers to support prices, as agreed in a meeting held in December to cut a total of 1.7 million barrels per day (bpd) of output until the end of March this year.
In its outlook for the year, OPEC expects its world market oil share production to fall further as output rises in non-OPEC rivals including the United States, Brazil, Canada, Australia, Norway and Guyana, leading to excess supply while global demand is rising, and without this measure, there was the likelihood of an oil glut.
Saudi Energy Minister Prince Abdulaziz bin Salman had earlier said that all options were open when OPEC+ meets next in the headquarters of the organisation in Vienna, Austria in March 5 and 6 hinting about the vague possibility of a further output reduction.
If this trend holds, market analysts say that with this good news amid a negative outlook in demand, oil prices may continue towards a path to recovery fully next week.
Dipo Olowookere