China’s move to cuts its benchmark lending rate on Thursday also helped to ease worries about demand destruction in the world’s second-biggest oil consumer and its largest crude oil importer
Oil prices rose nearly 1% on Thursday, extending big gains from a day earlier, as the market worried about crude supply disruptions and demand concerns were cushioned after a sharp drop in new coronavirus cases at the epicenter of the outbreak.
Tensions in Libya that have led to a blockade of its ports and oilfields have shown no signs a resolution, while US sanctions on a subsidiary of Russian state oil major Rosneft to cut Venezuelan crude from the market have helped rekindle global oil supply worries.
Brent crude futures LCOc1 rose 45 cents, or 0.8%, to $59.57 a barrel by 0208 GMT. The international benchmark rose 2.4% on Wednesday.
West Texas Intermediate (WTI) crude futures CLc1 climbed 49 cents, or 0.9%, to $53.78 per barrel. US crude also closed up 2.4% in the previous session.
"The oil market is starting to realize that as bad as the demand destruction is from the coronavirus, the lack of exports from Libya might be meeting the oil demand destruction barrel for barrel," said Phil Flynn, an analyst at Price Futures Group in Chicago.
"Libya was exporting 1.2 million barrels a day. That is more than the demand destruction estimates of about 400,000 barrels a day to about 1 million a day," Flynn said.
Libya's internationally recognized leader Fayez al-Serraj dashed hopes of reviving peace negotiations on Wednesday after the Libyan National Army (LNA) of Khalifa Haftar shelled the port of the capital, which is held by al-Serraj's government.
The ongoing conflict has cut oil exports by 1 million barrels per day (bpd), while losses from the oil blockade have exceeded $1.6 billion.
"Tension in Libya continues to threaten supply... The US sanctioned Russia's largest producer, which could further tighten the supply to Asian markets. Both of these developments could mitigate demand losses related to the coronavirus," ANZ Bank said in a note.
China's central Hubei province had 349 new confirmed cases on Wednesday, the lowest in more than three weeks, while death toll rose by 108, down from 132 the previous day.
Further supporting oil prices were expectations the Organization of the Petroleum Exporting Countries and its allies including Russia would likely to deepen ongoing supply cuts.
The producer group known as OPEC+, which has since Jan. 1 implemented a deal to cut output by 1.7 million bpd to help stabilize the market, will next meet in Vienna on March 6.
China's move to cuts its benchmark lending rate on Thursday also helped to ease worries about demand destruction in the world's second-biggest oil consumer and its largest crude oil importer.