Oil prices jumped by more than 3% on Wednesday after reports that scientists have found an effective drug against China’s fast-spreading coronavirus, which has hit the world’s second-largest economy in recent weeks.
Brent crude oil futures were up $1.76, or 3.2%, at $55.72 . U.S. WTI crude futures were up $1.34, or 2.6%, at $50.93.
China’s Changjiang daily reported on Tuesday that a research team at Zhejiang University found two new drugs that can effectively “inhibit coronavirus”.
Separately, Sky News cited Imperial College London researchers as saying that they made a significant breakthrough on a coronavirus vaccine, though the report said it would still be too late for the current outbreak.
The virus outbreak prompted bans on travel to many parts of China and steep output cuts by local oil refiners.
Analysts have estimated that the virus could reduce global oil demand by up to 0.5% this year.
The OPEC and allies led by Russia, a group known as OPEC+, weighed the impact on global oil demand and economic growth from the coronavirus outbreak at a meeting on Tuesday, hearing from China’s envoy to the United Nations in Vienna.
Producers are considering further output cuts and moving a planned policy meeting to February rather than March.
“This is a critical time for oil prices and even if we see OPEC+ deliver deeper production cuts, an extended shutdown of China will destroy demand for crude’s top importer,” said Edward Moya, an analyst at broker OANDA.
“At these prices, commodity producers will soon begin to cut back on production and investment,” Moody’s Analytics said in a note on Wednesday.
The U.S. Energy Information Administration will release its weekly report later on Wednesday.
Data from the American Petroleum Institute showed on Tuesday that U.S. crude oil stocks rose by 4.2 million barrels to 432.9 million barrels in the week to Jan. 31, well above analyst expectations for a build of 2.8 million barrels.