\Oil steadied in London after the longest rally in a year on signs of tighter global supply, and hopes that Chinese economic stimulus will cushion fuel demand from the impact of the coronavirus.
Brent traded near $59 a barrel after gaining 11% during a seven-day advance. The U.S. projected that shale output, which has kept markets awash with oil for years, will see only limited growth next month. The halt of exports from OPEC member Libya is showing no signs of ending, and American sanctions on Rosneft PJSC’s trading unit could impede shipments from Venezuela.
The Organization of Petroleum Exporting Countries and its allies seem to have given up on an emergency meeting to respond to the virus, with the coalition sticking to the scheduled gathering in early March. The group may still consider supply cuts then after Saudi Arabian Energy Minister Prince Abdulaziz bin Salman compared the impact of the epidemic to a blaze that needs the fire brigade.
“The recent bounce back in oil prices has been driven by combination of sentiment and supply factors,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA. “There’s a slower pace of growth in U.S. shale basins, the threat to Venezuelan production, and no apparent resolution to the situation in Libya.”
Oil prices have also been boosted by China’s deployment of a range of measures to support the economy, including lower borrowing costs for new corporate and household loans.
Yet the oil supply picture hasn’t wholly strengthened.
Industry data on Wednesday indicated that U.S. crude inventories swelled by more than 4 million barrels last week, though stockpiles of refined products declined. Government data due to be published later today is also forecast in a Bloomberg survey to show an increase in crude stocks.
Brent for April settlement lost 5 cents to $59.07 a barrel on the ICE Futures Europe exchange as of 10:42 a.m. in London. West Texas Intermediate for March delivery, which expires on Thursday, rose 18 cents to $53.47 on the New York Mercantile Exchange.