US West Texas Intermediate crude hit a 14-month low of $43.32 a barrel, before recovering to $45.23, up 47 cents, or 1.1%
Oil
prices pared losses after earlier hitting multi-year lows on Monday
as hopes that a bigger than expected production cut from OPEC
and stimulus from central banks could offset economic gloom from the
coronavirus outbreak.
Brent
crude was at $50.32 a barrel, up 65 cents, or 1.3%, by 0105 GMT,
after earlier dropping to $48.40, the lowest since July 2017.
US
West Texas Intermediate crude hit a 14-month low of $43.32 a barrel,
before recovering to $45.23, up 47 cents, or 1.1%.
Flight
cancellations and travel bans by countries worldwide sparked fears
about the global economy, leading to the biggest weekly stock market
rout since the 2008 financial crisis last week. China's factory
activity also shrunk at the fastest pace ever in February,
underscoring the colossal damage from the coronavirus
outbreak on the world's second-largest economy.
"On
the one hand, it's pretty negative on worldwide crude oil and product
demand," said Lachlan Shaw, head of commodity research at the
National Australia Bank.
On
the other hand, there was news Saudi Arabia was pushing for a million
barrels per day cut to be agreed this week, while central banks
globally were increasingly signalling an appetite to intervene and
support markets by cutting interest rates, he said.
"So
it's a balance and it's going to be pretty volatile."
Several
key members of the Organization of the Petroleum Exporting Countries
(OPEC) are mulling an additional production cut of 1 million barrels
per day, more than the 600,000 bpd proposed last month, on growing
fears that the virus outbreak will hit oil demand badly.
OPEC
and its allies including Russia, a grouping known as OPEC+, have
already been curbing oil output by 1.7 million bpd under a deal that
runs to the end of March.
"Current
prices do not work for most of the OPEC+ group as they stand and
Russia is not as price agnostic as it endeavours to seem," said
Helima Croft global head of commodity strategy at RBC Capital
Markets.
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