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Oil rebounds, but markets ‘twitchy’ over China virus impact on demand

Oil steadies, but concern over spreading China virus weighs
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SINGAPORE (Reuters) – Oil prices edged up on Friday, helped by a decline in U.S. crude stockpiles, but were on track for to fall up to 5% for the week on worries that the China coronavirus that has killed 25 so far may spread, curbing travel, fuel demand and economic prospects.

FILE PHOTO: Pump jacks operate at sunset in an oil field in Midland, Texas U.S. August 22, 2018. REUTERS/Nick Oxford

Brent crude futures LCOc1 were up 24 cents, or 0.4%, at $62.28 a barrel by 0456 GMT after falling 1.9% the previous session. For the week, Brent is down 4%.

U.S. West Texas Intermediate futures CLc1 were 24 cents, or 0.4%, higher at $55.83 a barrel. The contract fell 2% on Thursday and is 5% lower for the week.

“(The) virulent sell-off on the … flu scare was mollified by a timely decline in U.S. crude inventories,” said Stephen Innes, market strategist at AxiTrader.

“Oil prices could remain on a slippery slope as traders remain incredibly twitchy about the effects the coronavirus outbreak could have on Chinese GDP and air travel more broadly,” said Innes.

The virus has infected more than 800 so far in China, with 25 dead as of Thursday, according to China’s National Health Commission. The World Health Organisation has declared the situation an emergency, but stopped short of declaring the epidemic of international concern.

Most of the cases are in the central Chinese city of Wuhan, where the virus is believed to have originated late last year, though cases have now been found in at least seven other countries.

Offering some support for prices was news that U.S. crude oil and distillate inventories fell last week, the Energy Information Administration said on Thursday.

Though they failed to match analysts’ expectations in a Reuters poll of a 1 million barrel drop, crude inventories did decline by 405,000 barrels in the week to Jan. 17, government data showed.

Elsewhere, refined fuel exports from India jumped in December as its slowing economy crimped domestic demand.

India’s refined fuel exports rose 24.2% in December year-on-year to 6.46 million tonnes, the fastest growth since October 2016, official data released on Thursday showed.

Reporting by Roslan Khasawneh; Editing by Kenneth Maxwell

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