NEW YORK (Reuters) - 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.
Brent LCOc1 futures rose 19 cents, or 0.3%, to $59.51 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 gained 34 cents, or 0.6%, to $53.48.
“The bulk of today’s oil market advance appeared to reflect spillover from the strong rebound in the equities,” Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report, noting the strong dollar also restricted “buying enthusiasm in the energy complex.”
The U.S. dollar .DXY rose to its highest since early December against a basket of currencies. Oil prices are usually priced in dollars so a stronger greenback makes crude more expensive for buyers with other currencies.
On Monday, both oil 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 were on track for their biggest monthly declines since May.
The market is also awaiting weekly U.S. oil inventory reports, with data from the American Petroleum Institute (API) at 4:30 p.m. EST expected to show a 500,000-barrel crude build last week, while gasoline stocks likely extended their gains to a 12th successive 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.
President Xi Jinping said on Tuesday that China was sure of defeating a “devil” coronavirus that has killed 106 people, but international alarm was rising as the outbreak spread across the world.
Additional reporting by Jessica Resnick-Ault in New York, Katya Golubkova and Shadia Nasralla in London and Aaron Sheldrick in Tokyo; Editing by Marguerita Choy and David Gregorio