Oil Swings as Investors Grapple With Coronavirus Uncertainty

Crude prices swung between gains and losses on Wednesday, highlighting investors' efforts to weigh the possible long-term effects of a deadly new coronavirus on global oil demand.

U.S. crude futures edged down 0.3% to $53.33 a barrel, while Brent, the global gauge of prices, rose 0.5% to $59.81 a barrel.

Crude futures have been under pressure this past week from fears that the virus -- which has sickened thousands in China and spread to other countries -- will dent long-term demand from the world's largest oil importer. The Organization of the Petroleum Exporting Countries said its ministers and key ally Russia were discussing how to respond to the outbreak, including the possibility of deepening cuts to output.

Investors are worried that a prolonged outbreak will drive down demand for crude products, such as jet fuel. The virus took hold just as the country was entering the Lunar New Year holiday, usually one of the busiest traveling seasons of the year. The government has urged people not to travel and has closed off the hardest-hit cities.

The U.S., U.K. and New Zealand have all advised citizens against nonessential travel to China, and multinational companies including JPMorgan Chase & Co., Apple Inc. and Kraft Heinz Co. are suspending business trips to China.

"Oil needs to see the return of some normalcy in travel," wrote Edward Moya, senior market analyst at Oanda, in a note. "Otherwise, we could see selling pressure test the $50 a barrel level," he wrote.

A larger-than-expected build in domestic crude stockpiles also weighed on prices Wednesday. The U.S. Energy Information Administration reported that inventories rose by 3.5 million barrels last week, more than the 700,000-barrel rise that analysts and traders surveyed by The Wall Street Journal had predicted.

Crude futures swung up briefly Wednesday after Iran-aligned Houthis in Yemen claimed responsibility for recent attempted missile attacks on Saudi Arabian Oil Co. facilities and other sites in Saudi Arabia. The kingdom's air defense forces shot down the missiles, Saudi officials said. Prices pared those gains later in the day.

Elsewhere in commodities, natural-gas futures fell to their lowest level since March 2016. Prices fell 2.9% to $ 1.877 per million British thermal units, dragged lower by predictions of a shift to warmer weather in the next several days.

"It is growing more and more likely that we have not seen the bottom in prices, given that we still do not see any convincing evidence that the pattern will materially change in a way to bring cold into key areas of the nation for natural-gas consumption," wrote analysts at Bespoke Weather Services in a Wednesday note.

Write to Sarah Toy at sarah.toy@wsj.com


  (END) Dow Jones Newswires
  01-29-20 1541ET
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