Oil advances on short-covering despite heavy coronavirus concerns

TOKYO- Oil prices positively performed on Wednesday as investors resorted to short-covering after three sessions of inactivity. Gains were recorded even as novel coronavirus contagion continues to bring worries that its further spread may lead to a global crisis.

Brent crude added 42 cents, equivalent to 0.8%, and last stood at $55.37 per barrel at exactly 0154 GMT. U.S. West Texas Intermediate crude acquired 43 cents, equivalent to 0.9%, with recent quotation of $50.33 per barrel. Despite the increase, both benchmarks are still struggling after 7% drop on Thursday’s session.

Coronavirus concerns dragged market sentiment downward after the virus spread further to other countries. So far, Iran already recorded 16 deaths, the highest death toll outside China, and growing infections were monitored in South Korea and Italy.

The Center for Disease Control and Prevention of the United States warned that Americans must stay vigilant and brace for the possibility of community contagion.

“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.

“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 added.