(Bloomberg) -- Oil recovered from a one-year low to trade above $50 a barrel as Saudi Arabia ran into Russian resistance in its push for further production cuts to combat a virus-driven demand hit.
Futures rebounded with Asian stocks on Wednesday, but oil is still down more than 20% since early January as the coronavirus dents global demand. Saudi Arabia’s push for deeper supply reductions to combat the drop in consumption due to the outbreak is being received with caution by Russia, whose budget is more resilient to lower prices.
BP (LON:BP) Plc is forecasting the crisis will wipe out one-third of global oil demand growth this year, although OPEC’s internal analysis indicates a modest drop of around 400,000 barrels a day for about six months. In the U.S., an industry report showed an expansion in crude stockpiles, adding to worries about weak consumption.
“While prices are rising today after a sell-off, crude is likely to continue tumbling on demand fears until the coronavirus abates or OPEC+ implements a supply cut,” said Vandana Hari, founder of Vanda Insights in Singapore. “Waiting for the virus to subside might prove costly for OPEC and its allies.”
West Texas Intermediate for March delivery added 49 cents, or 1%, to $50.10 a barrel on the New York Mercantile Exchange as of 10:30 a.m. in Singapore. The contract fell 50 cents to $49.61 on Tuesday, the lowest since January 2019.
Brent for April settlement rose 1% to $54.52 a barrel on the London-based ICE (NYSE:ICE) Futures Europe exchange. The global benchmark crude traded at a premium of $4.25 to WTI for the same month.
