Oil gains a second day as coronavirus optimism may mean demand rebound

TOKYO, Feb 6 (Reuters) - Oil futures rose for a second day
on Thursday as investors took optimism around unconfirmed
reports of possible medical advances to combat the coronavirus
outbreak in China as a sign fuel demand could rebound in the
world's biggest oil importer.
Prices also gained after a government report on Wednesday
showed U.S. gasoline and diesel inventories fell.
Brent futures rose by 62 cents, or 1.1%, to $55.90 a barrel
by 0142 GMT, having risen 2.4% in the last session. U.S. West
Texas Intermediate (WTI) futures gained 73 cents, or 1.4%, to
$51.48 a barrel after rising 2.3% on Wednesday.
Commodities, equities and other markets have been buoyed by
unconfirmed reports of a possible advance in producing treatment
drugs for the coronavirus that has shut down transport and
limited industrial activity in China. However, the World Health
Organization has played down the reports of "breakthrough" drugs
being discovered. MKTS/GLOB
Furthermore, an additional 73 people on the Chinese mainland
died on Wednesday from the virus, the highest daily increase
since the outbreak started, and another 3,694 new cases were
reported, raising the total to 28,018. In the U.S., gasoline stockpiles dropped last week, counter
to analysts' expectations for a gain, and diesel inventories
fell more than expected, the Energy Information Administration
reported. However, crude stockpiles rose USOILC=ECI rose by a
more-than-expected 3.4 million barrels last week to 435 million
barrels. EIA/S
"While small falls in U.S. product stocks suggest demand is
holding up, it would take a surge in U.S. consumption to even go
some of the way to offset the slump in China's consumption owing
to the outbreak of coronavirus," Capital Economics said.
Commodity supply chains in China have been disrupted to the
extent that short-term sales of crude oil, along with liquefied
natural gas, fell to nearly zero this week.
Buyers in China, the world's biggest importer of most
commodities, are considering taking legal action to avoid
honouring purchase agreements.