Oil inches higher, but gains capped by widening economic impact of coronavirus outbreak

TOKYO, Feb 19 (Reuters) - Oil prices were slightly higher on
Wednesday with gains limited by the widening economic impact
from the coronavirus epidemic that started in China, although
new confirmed cases fell for a second day in the province at the
centre of the outbreak.
Brent crude LCOc1 was up by 6 cents at $57.81 a barrel by
0149 GMT, while U.S. oil CLc1 was up 7 cents at $51.97 a
barrel. Both contracts started the Asian session trading lower.
China is struggling to get manufacturing back on line in the
world's second-largest economy after imposing stringent
city-wide lockdowns and travel restrictions in efforts to
contain the virus.
Official data showed new cases in Hubei province fell for a
second straight day, although the number of deaths increased,
and the World Health Organization earlier cautioned there was
not enough data to know if the epidemic was being contained.
Oil prices have risen as much as around 8% since hitting
lows for this year just over a week ago, but another sharp
downturn in prices could prompt the Organization of the
Petroleum Exporting Countries (OPEC) and its allies to deepen
supply cuts.
The grouping, known as OPEC+, has been withholding supply to
support prices and is meeting next month to decide a response to
the latest downturn in demand resulting from the epidemic.
OPEC+ wants to "prevent the emergence of a large supply
overhang caused by slumping demand amid the health crisis
centred in China, the world's biggest importer of crude oil,"
Eurasia Group said in a note.
In a further sign of widening fallout from the outbreak,
Japan's exports in January were down for a 14th straight month
as a gauge of capital spending tumbled. That came after data on Monday showed that Japan's economy
contracted in the last quarter by the most since 2014, and the
virus outbreak is threatening to push the world's third-biggest
economy into recession.