UPDATE 11-Oil prices jump 2% as virus vaccine reports spur hope

* Oil jumps over 2% on reports of virus vaccine
* WHO plays down media vaccine reports
* OPEC+ panel meets on demand impact from coronavirus
* U.S. crude stocks up in latest week -EIA

(New throughout, updates prices, market activity and comments
to settlement, adds latest on OPEC+)
By Devika Krishna Kumar
NEW YORK, Feb 5 (Reuters) - Oil prices jumped about 2% on
Wednesday on media reports that suggested scientists were
developing a vaccine for the fast-spreading coronavirus, even as
world health experts said treatments have not yet been found.
Also supporting oil was news that the Organization of the
Petroleum Exporting Countries (OPEC) and its producer allies
were considering further output cuts to counter a potential
squeeze on global oil demand.
The outbreak has killed nearly 500 people and is weighing on
global economic activity and oil demand.
The World Health Organization played down the media reports,
saying there were "no known effective therapeutics" against the
virus. Brent crude oil futures LCOc1 ended the session up $1.32,
or 2.5%, at $56.46 a barrel while U.S. West Texas Intermediate
(WTI) crude CLc1 gained $1.14, or 2.3%, to settle at $50.75.
Both contracts rose more than 4% during the session.
Prices held gains after data showed U.S. crude inventories
USOILC=ECI rose by 3.4 million barrels in the week to Jan. 31,
compared with expectations in a Reuters poll for a rise of 2.8
million barrels. "The report probably had nothing shocking enough to ruin the
momentum of the big crude comeback that we are seeing today,"
said Phil Flynn, an analyst at Price Futures Group in Chicago.
"The main reason oil sold off as hard as it did wasn't
because of what we knew; it was what we didn't know. Now, it
seems like we can quantify the demand destruction and look
ahead."
China's Changjiang Daily newspaper reported on Tuesday that
a team of researchers led by Zhejiang University Professor Li
Lanjuan had found that drugs Abidol and Darunavir can inhibit
the virus in vitro cell experiments.
Separately, Sky News reported that a British scientist has
made a significant breakthrough in the race for a vaccine by
reducing part of the normal development time from two to three
years to only 14 days. Still, refineries including China's Sinopec, Asia's top
refiner, have slashed throughput as the virus cuts demand for
refined fuels. Fears of a slump in global oil demand had pushed U.S. crude
and Brent futures into contango this week - a structure in which
longer-dated oil futures trade at a premium that encourages
traders to keep crude in storage for more profitable resale in
the future. "Based on our forecast that China's GDP growth will slow to
just 3% year-over-year in Q1 2020 and assuming that the virus is
brought under control relatively quickly, we have tentatively
penciled in a 10% drop in the country's oil consumption in Q1,"
Capital Economics analysts said in a note on Wednesday. "This
pushes the global market into a small surplus in the first half
of 2020."
Falling demand for jet fuel worldwide because of the deadly
coronavirus has also hit U.S. prices for the product, which
dropped to their lowest seasonally in five years, market
participants said.
Companies including Royal Dutch Shell RDSa.L and Phillips
66 PSX.N have limited business travel to China IMPACT
A slowdown in the global economy resulting from the outbreak
is expected to reduce 2020 worldwide oil demand growth by
300,000-500,000 barrels per day (bpd), roughly 0.5% of total
demand, BP's Chief Financial Officer Brian Gilvary
said. "The (Chinese) economy will be weakened for some time to
come as quarantines, social distancing and travel restrictions
remain in place," BNP Paribas analyst Harry Tchilinguirian told
the Reuters Global Oil Forum.
"But as financial markets are anticipatory, one can see how
favorable news in relation to potential medical solutions, or
indications that we have reached a turning point in the progress
of the virus outbreak, are likely to be interpreted positively."
OPEC and allies led by Russia, a group known as OPEC+,
considered the impact on global oil demand and economic growth
from the coronavirus at a meeting on Wednesday. However, Russia was not supporting a deeper oil output cut
and was suggesting an extension of the current pact, a source
familiar with the matter told Reuters. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Interactive comparison of outbreaks https://tmsnrt.rs/2GK6YVK
China virus hits cruise ships, carmakers, airlines and Airbus
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