Oil prices jumped by four per cent on Wednesday on media reports that scientists had developed a drug against the fast-spreading coronavirus, an outbreak that continues to weigh heavily on global economic activity and oil demand.
The World Health Organisation played down the media reports, saying there were “no known effective therapeutics” against the virus.
Lending further support to oil was news that the Organisation of the Petroleum Exporting Countries and its producer allies were considering further output cuts to counter a potential squeeze on global oil demand, Punch Newspaper reported.
Brent crude oil futures were up $2.11, or four per cent, at $56.09 a barrel by 10:53 a.m. ET (1553 GMT), while US West Texas Intermediate crude gained $1.94, or 3.9 per cent, to $51.55, according to Reuters.
Prices held gains after data showed US crude inventories rose by 3.4 million barrels in the week to January 31, compared with expectations in a Reuters poll for a 2.8 million-barrel rise.
China’s Changjiang Daily newspaper reported on Tuesday that a team of researchers led by Zhejiang University Professor Li Lanjuan had found that drugs Abidol and Darunavir can inhibit the virus in vitro cell experiments.
Separately, Sky News reported that a British scientist has made a significant breakthrough in the race for a vaccine by reducing part of the normal development time from two to three years to only 14 days.
Still, refineries including China’s Sinopec, Asia’s top refiner, have slashed throughput as the virus cuts demand for refined fuels.
Fears of a slump in global oil demand had pushed US crude and Brent futures into contango this week – a structure in which longer-dated oil futures trade at a premium that encourages traders to keep crude in storage for more profitable resale in the future.