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Oil prices rose over 3 per cent on Wednesday as China reported its lowest daily number of new coronavirus cases since late January, stoking investor hopes that fuel demand in the world’s second-largest oil consumer may begin to recover.

Brent futures gained $1.78, or 3.3 per cent, to settle at $55.79 per barrel, while U.S. West Texas Intermediate (WTI) crude gained $1.23, or 2.5 per cent, to settle at $51.17.

Those were the highest settles for both futures since January even though the U.S. government reported a larger-than-expected weekly build in crude inventories that was countered by a decline in fuel stocks, including an unexpected gasoline drawdown.

Crude inventories rose 7.5 million barrels last week, the Energy Information Administration said, compared with analysts’ expectations in a Reuters poll for a 3 million-barrel rise.

“Gasoline demand is starting to rebound, and the modest drawdown in refined fuels helped to offset the bearish, blaring crude oil headline,” said John Kilduff, a partner at Again Capital in New York.

U.S. gasoline refining margins rose to their highest since August due to a sharp 4.4 per cent increase in gasoline futures.

According to data through Tuesday, the growth rate of new coronavirus cases in China has slowed to the lowest since Jan. 30. Still, international experts remained cautious over forecasting when the outbreak might peak.

“Reports out of China indicating a reduction in the number of new virus cases forced additional accumulation across various asset classes today,” Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, said in a report, noting the energy complex was also rising with new highs in the stock market.

Travel restrictions to and from China and quarantines have cut fuel usage. The two biggest Chinese refiners have said they will reduce their processing by about 940,000 barrels per day (bpd) as a result of the consumption drop, or about 7 per cent of their 2019 processing runs.

The Organization of the Petroleum Exporting Countries (OPEC) cut its forecast for global growth in oil demand due to coronavirus by 230,000 bpd - a fairly modest assessment compared with other forecasters.

The U.S. government on Tuesday cut its growth forecast for this year by 310,000 bpd.

The demand concerns from the outbreak pushed Brent and WTI to their lowest in 13 months on Monday. Despite recent gains, both benchmarks are still down more than 20 per cent from highs reached in January.

On the supply side, OPEC recommended a further cut of 600,000 bpd last week to stem the oil price fall. OPEC is now waiting for a response from Russia as to whether Moscow would help execute the cuts.

“Clearly, the ongoing developments in China require continuous monitoring and assessment,” OPEC said.

Most Russian oil companies want OPEC’s global output curbs to remain in place for one more quarter.

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