Oil rises on short-covering despite growing fears over coronavirus

* Investors unwind positions as WTI slides below $50/bbl
* U.S. crude inventories rise for fifth week - API

By Yuka Obayashi
TOKYO, Feb 26 (Reuters) - Crude prices edged up on Wednesday
as investors covered short positions after three sessions of
losses, even as fears deepened that the rapid spread of the
coronavirus will lead to a global pandemic.
Brent crude LCOc1 rose 42 cents, or 0.8%, to $55.37 a
barrel by 0154 GMT, while U.S. West Texas Intermediate crude
CLc1 gained 43 cents, or 0.9%, to $50.33 a barrel. Still, both
benchmarks are down nearly 7% since last Thursday's close.
Fears of a pandemic escalated after the coronavirus spread
to more countries, while Iran's virus death toll rose to 16, the
highest outside China, and infections worsened in South Korea
and Italy. In the United States, the Centers for Disease Control and
Prevention said Americans should prepare for possible community
spread of the virus.
"Investors unwound short positions after WTI dipped below a
key support level of $50, as they have done a few times earlier
this month," said Hideshi Matsunaga, analyst at Sunward Trading.
"The reduction in Libya's output and expectations for
additional production cuts by the Organization of the Petroleum
Exporting Countries (OPEC) and OPEC+ are also lending support,"
he said.
Oil output in Libya has fallen sharply since Jan. 18 because
of a blockade of ports and oil fields by groups loyal to
eastern-based commander Khalifa Haftar. OPEC and its allies including Russia, a group known as
OPEC+, are due to meet in Vienna over March 5-6.
Saudi Arabia's energy minister said on Tuesday he was
confident that OPEC and its partners would respond responsibly
to the spread of the coronavirus. Still, lingering worries that the rapidly spreading
coronavirus will dent the global economy and oil demand are
weighing on investor sentiment.
The International Energy Agency's (IEA) outlook on global
oil demand growth has fallen to its lowest level in a decade,
IEA Executive Director Fatih Birol said on Tuesday, adding it
could be reduced further due to the coronavirus outbreak.
U.S. crude inventories are expected to rise for a fifth week
running. The American Petroleum Institute (API) said late
Tuesday that crude stockpiles rose 1.3 million barrels last
week. Government data due at 10:30 a.m. EST (1530 GMT) on
Wednesday was expected to show a 2 million-barrel rise,
according to a Reuters poll. EIA/S
Meanwhile, the United States is preparing to impose more
sanctions on Venezuela's oil sector, President Donald Trump said
on Tuesday, in an attempt to choke financing to President
Nicolas Maduro's government.