By Koustav Samanta
SINGAPORE, Feb 20 (Reuters) - 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
epicentre of the outbreak.
Tensions in Libya that have led to a blockade of its ports
and oilfields have shown no signs a resolution, while U.S.
sanctions on a subsidiary of Russian state oil major Rosneft
ROSN.MM 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. U.S. 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 recognised 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 U.S.
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.