Oil bounces as investors hunt bargains; virus fears cap gains

* Investors seek bargains as WTI drops near $50/bbl
* Saudi Aramco says coronavirus impact to be short-lived

By Yuka Obayashi
TOKYO, Feb 25 (Reuters) - Oil rose on Tuesday as investors
snapped up bargains after crude benchmarks dropped almost 4% in
the previous session, but fears that the spreading coronavirus
could wreak far greater economic damage than initially thought
capped gains.
Brent crude LCOc1 rose 29 cents, or 0.5%, to $56.59 a
barrel by 0212 GMT, after slipping 3.8% on Monday, the largest
single-day price fall since Feb. 3. U.S. crude futures CLc1
climbed 22 cents, or 0.4%, to $51.65, recovering from a 3.7%
drop in the previous session.
"WTI has regained some ground as investors looked for
bargains and as the (U.S.) benchmark slipped neared a key
support level of $50 per barrel," said Satoru Yoshida, a
commodity analyst with Rakuten Securities.
Demand concerns savaged prices for oil and a whole swathe of
industrial commodities on Monday while both U.S. and European
equities suffered their steepest losses since mid-2016.
"Fears that the rapidly-spreading coronavirus outside of
China could lead to a bigger-than-anticipated impact on global
economy and oil demand will likely keep weighing on market
sentiment," Yoshida said.
The coronavirus death toll climbed to seven in Italy on
Monday and several Middle East countries were dealing with their
first infections, sending markets into a tailspin.
The coronavirus outbreak can still be beaten, the World
Health Organization said on Monday, insisting it was premature
to declare it a pandemic even though it had the potential to
reach that level.
Asian shares extended losses on Tuesday amid fears the
coronavirus was mutating into a pandemic that could cripple
global supply chains and damage economies far more than
initially expected. MKTS/GLOB
Saudi Aramco 2222.SE expects the coronavirus impact on oil
demand to be short-lived, however, and for consumption to rise
in the second half of the year, Chief Executive Amin Nasser told
Reuters on Monday.
In the United States, crude oil inventories were seen
building for the fifth straight week, while refined products
likely fell last week, a preliminary Reuters poll showed on
Monday.