WASHINGTON (DTN) -- Oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange reversed higher on Tuesday. Futures were bolstered by chatter the Organization of the Petroleum Exporting Countries and partners are considering deeper production cuts to halt the slide in oil prices and after the World Health Organization eased some concerns over the spreading coronavirus pandemic.
Tuesday afternoon, traders also await a weekly release of supply data on U.S. crude and petroleum supplies from American Petroleum Institute due out 4:30 p.m. EST. Markets expect commercial crude supplies to have decreased by about 1.7 million barrels (bbl) during the week ended Jan. 24, while gasoline stocks added 1.8 million bbl and distillate fuel stockpiles fell by 1.5 million bbl on the week.
NYMEX March West Texas Intermediate futures clawed back $0.34 to a $53.48-per-bbl settlement and ICE March Brent futures ended up $0.19 at $59.51 bbl, with both benchmarks reversing off Monday's three-month lows.
NYMEX February RBOB futures advanced 1.92 cents to $1.5032 gallon, moving off a five-month low settlement from session prior. Front-month ULSD futures added 3.64 cents to settle at $1.7159 gallon, after hitting a $1.6795 better-than-one-year-low settlement.
Oil futures halted the five-day decline on Tuesday amid some signs that 2019-nCov virus will be mostly contained within China's borders after several countries introduced travel restrictions to reduce the risk of the pandemic spreading globally. WHO Director General Dr. Tedros Adhanom Ghebreyesus also reassured markets Tuesday that Chinese authorities are taking all precautionary measures to battle the outbreak.
Although oil complex reversed higher on Tuesday, investors now brace for a heavy blow to China's first quarter economic growth tied to lower consumer spending and travel. Many international companies said they were pulling their stuff out of the Wuhan region -- the epicenter of the virus -- and suspending operations during the health crisis.
S&P Global Platts forecast a drop of 200,000 barrels per day (bpd) in oil demand for the next two or three months, reflecting roughly 15% of the expected oil demand growth in 2020.
Faced with this grim outlook, OPEC is reportedly considering extending and/or deepening the current 1.7 million bpd in production cuts through at least June. Reuters reported that even Russia, a reluctant participant to the accord, agreed to additional measures if oil prices remain depressed below $60.
Also supporting the complex, Libya's crude production collapsed to just 284,153 bpd on Monday due to continued blockade on the country' oil pipelines, export terminals and production sites. Libya's National Oil Company said in a statement oil output dropped 75% this week from 1.2 million bpd prior to the blockade, while calling for emergency relief.
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