Crude prices edged up on February 26 as investors covered short positions after three sessions of losses, even as fears deepened that the rapid spread of the coronavirus will lead to a global pandemic.
Brent crude rose 42 cents, or 0.8 percent, to $55.37 a barrel by 0154 GMT, while US West Texas Intermediate crude gained 43 cents, or 0.9 percent, to $50.33 a barrel. Still, both benchmarks are down nearly 7 percent since last Thursday's close.
Fears of a pandemic escalated after the coronavirus spread to more countries, while Iran's virus death toll rose to 16, the highest outside China, and infections worsened in South Korea and Italy.
In the United States, the Centers for Disease Control and Prevention said Americans should prepare for possible community spread of the virus.
"Investors unwound short positions after WTI dipped below a key support level of $50, as they have done a few times earlier this month," said Hideshi Matsunaga, analyst at Sunward Trading.
Frequently Asked Questions
A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.
There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.
Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.
"The reduction in Libya's output and expectations for additional production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and OPEC+ are also lending support," he said.
Oil output in Libya has fallen sharply since Jan. 18 because of a blockade of ports and oil fields by groups loyal to eastern-based commander Khalifa Haftar.
OPEC and its allies including Russia, a group known as OPEC+, are due to meet in Vienna over March 5-6.
Saudi Arabia's energy minister said on February 25 he was confident that OPEC and its partners would respond responsibly to the spread of the coronavirus.
Still, lingering worries that the rapidly spreading coronavirus will dent the global economy and oil demand are weighing on investor sentiment.
The International Energy Agency's (IEA) outlook on global oil demand growth has fallen to its lowest level in a decade, IEA Executive Director Fatih Birol said on February 25, adding it could be reduced further due to the coronavirus outbreak.
US crude inventories are expected to rise for a fifth week running. The American Petroleum Institute (API) said late February 25 that crude stockpiles rose 1.3 million barrels last week. Government data due at 10.30 am. EST (1530 GMT) on February 26 was expected to show a 2 million-barrel rise, according to a Reuters poll.
Meanwhile, the United States is preparing to impose more sanctions on Venezuela's oil sector, President Donald Trump said on February 25, in an attempt to choke financing to President Nicolas Maduro's government.