Oil bounces as investors hunt bargains; virus fears cap gains

Oil rose on Tuesday as investors snapped up bargains after crude benchmarks dropped almost 4% in the previous session, but fears that the spreading coronavirus could wreak far greater economic damage than initially thought capped gains.

Brent crude rose 29 cents, or 0.5%, to $56.59 a barrel by 0212 GMT, after slipping 3.8% on Monday, the largest single-day price fall since Feb. 3. U.S. crude futures climbed 22 cents, or 0.4%, to $51.65, recovering from a 3.7% drop in the previous session.

Demand concerns savaged prices for oil and a whole swathe of industrial commodities on Monday while both U.S. and European equities suffered their steepest losses since mid-2016.

The coronavirus death toll climbed to seven in Italy on Monday and several Middle East countries were dealing with their first infections, sending markets into a tailspin.

The coronavirus outbreak can still be beaten, the World Health Organization said on Monday, insisting it was premature to declare it a pandemic even though it had the potential to reach that level.

Asian shares extended losses on Tuesday amid fears the coronavirus was mutating into a pandemic that could cripple global supply chains and damage economies far more than initially expected.

In the United States, crude oil inventories were seen building for the fifth straight week, while refined products likely fell last week, a preliminary Reuters poll showed on Monday.