Oil futures edged up on Tuesday after falling for five days, gaining support from a rebound in Wall Street stocks and talk that OPEC and its allies might tighten the market amid fears the coronavirus could weigh on oil demand.
U.S. stocks rose as gains in technology and financial shares helped major indexes recover from their biggest selloff in about four months on worries over a coronavirus outbreak and its possible impact on global growth.
"WTI is correlating to U.S. equities, which are stronger," said Bob Yawger, director of energy futures at Mizuho in New York.
On Monday, both benchmarks dropped to their lowest since October with Brent down as much as 18% and WTI falling as much as 21% from highs hit earlier in January due to U.S.-Iran tensions. The contracts are on track for their biggest monthly declines since May.
Those moves come ahead of a report from the American Petroleum Institute (API) at 4:30 p.m. EST expected to show a 500,000-barrel build in U.S. crude stockpiles last week.
Saudi Arabia, de-facto leader of the Organization of the Petroleum Exporting Countries, has sought to calm market jitters, urging caution against gloomy expectations on the impact of the virus on global oil demand.
OPEC officials have also started weighing options such as extending current oil output cuts until at least June, with the possibility of deeper reductions if oil demand in China is heavily hit by the virus, OPEC sources said.
OPEC+, the producer group that includes allies like Russia, has been reducing oil supply to support prices, agreeing in December to hold back 1.7 million barrels per day (bpd) of output until the end of March.
Meanwhile, Libyan output has fallen nearly 75% to just below 300,000 bpd amid the most extensive oil blockade for years. The OPEC member is exempt from cutting output.
President Xi Jinping said China was sure of defeating a "devil" coronavirus that has killed 106 people and spread across the world, rattling financial markets.
Still, the virus has been detected in more than a dozen countries, and the United States and other countries warned against travel to China.