WASHINGTON (DTN) -- Crude and product futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange rallied in early trade Wednesday following reports of a critical breakthrough in developing a vaccine against the deadly Wuhan coronavirus that has weighed on short-term global economic growth and demand for crude oil.
Near 8:15 a.m. EST, NYMEX March West Texas Intermediate surged $1.23 to $50.84 barrel (bbl) after settling below the psychological $50 bbl mark the session prior. ICE April Brent contract rallied $1.32 to $55.28 bbl, up more than 2.5%.
NYMEX March RBOB futures advanced 3.08 cents to near $1.4740 gallon, reversing off a better-than-five month spot low $1.4432 gallon and March ULSD contract clawed back 4.26 cents to $1.6265 gallon, moving off a nearly 30-month spot low at $1.5684.
Overnight reports indicate a research team at China's Zhejiang University has found an effective drug to treat people with the new Cov2019 strain of coronavirus that has infected more than 25,000 people worldwide. Wire services also reported a second team in the United Kingdom has developed an alternative vaccine, further calming fears the coronavirus would expand into a global pandemic.
Following the reports, global equities staged an impressive recovery on Wednesday as investors seemed to improve their outlook on economic growth. A pan-European equity index and Wall Street futures were up 1%, while Asian equities notched their first daily back-to-back gain in nearly two weeks.
Oil futures were also buoyed by potential supply reduction from the OPEC+ coalition, as they assessed an emerging demand gap in the world's second largest economy. Saudi Arabia has been reportedly pushing the group to make an aggressive short-term cut of as much as 500,000 barrels per day (bpd) to 1 million bpd to halt the decline in oil prices. In contrast, Russia Energy Minister Alexander Novak advocated for patience on the developing health crisis in China, highlighting many uncertainties in demand forecasts.
Discussions of deeper cuts come less than two months after the 23-nation coalition agreed to curb output 1.7 million bpd through the end of March. Its next meeting was originally scheduled for March 5-6.
Separately, the American Petroleum Institute reported on Tuesday nationwide crude stocks increased by a larger-than-expected 4.182 million bbl during the week ended Jan. 31, while also detailing a 957,000 bbl build at the Cushing supply hub in Oklahoma.
Industry data also showed U.S. gasoline supplies expanded by 1.963 million bbl in the week profiled, more than estimates for a 1.5 million bbl increase, and distillate stockpiles fell 1.783 million bbl, missing calls for a decrease of 800,000 bbl.
The U.S. Energy Information Administration is due to publish its weekly inventory report 10:30 a.m. EST.
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