Oil rises for third day as coronavirus impact may spur output cuts

Oil prices rose for a third day on expectations that major producers are likely to enact deeper output cuts to offset the slump in demand caused by the coronavirus outbreak in China, the world's second-largest crude consumer.

Brent crude rose 17 cents, or 0.3%, to $55.96 per barrel at 0217 GMT. U.S. West Texas Intermediate (WTI) rose 29 cents, or 0.6%, to $51.46 a barrel.

The Organization of Petroleum Exporting Countries (OPEC) and its allies including Russia, known as OPEC+, recommended last week an additional output cut of 600,000 barrels per day (bpd) to its current 1.7 million bpd reduction to offset the disease-related demand losses.

OPEC yesterday lowered its 2020 forecast for demand for the group's crude by 200,000 bpd, prompting expectations that OPEC+ will enact the cuts when the group next meets, possibly as early as this month.

Brent and WTI have fallen more than 20% from their 2020-peak in January. The contracts rose over 3% on Wednesday as a slowdown in new Chinese coronavirus cases boosted expectations of a demand recovery.

Adding to the sense of a well-supplied market, U.S. crude inventories in the week to Feb. 7 increased by a more-than-expected 7.5 million barrels to 442.5 million barrels, the Energy Information Administration said on Wednesday. That is the highest since the week of Dec. 13.