Oil prices steady after closing 4% lower

Oil prices recovered on Tuesday in Asia after registering their worst one-day plunge since the coronavirus contagion began.

US Crude Oil WTI Futures gained 0.4% to $51.62 by 12:02 AM ET (04:02 GMT), while International Brent Oil Futures rose 0.3% to $55.94.

Oil markets ended almost 4% down in the previous day and recorded its biggest drop in almost seven week as investors worried about weakening Chinese oil demand.

The drop in prices came amid a sharp uptick in coronavirus cases outside of China. Italy reported seven deaths on Monday, while several Middle East countries, including Afghanistan and Iraq, reported their first infections. The World Health Organization calling the outbreak’s spread “deeply concerning.”

That came on top of a recent forecast by the International Energy Agency that demand for oil will be 435,000 barrels less per day in the first quarter of this year versus the opening quarter of 2019.

“For oil the fear is we will see more demand destruction and turn a very tight global oil market into an oversupplied market,” said Phil Flynn, analyst at Chicago brokerage Price Futures Group.

“The oil market is pricing in the risk of a global slowdown as the virus spreads,” Flynn added. “We can give historical contexts to these types of events and in the big picture demand shocks, oil should be bought, not sold. Yet try telling the market that.”

Looking ahead, the American Petroleum Institute (API) will report its measure of U.S. oil inventories at 4:30 PM ET.

Last week API reported a stockpile build of 4.2 million barrels.