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Oil exceeds $ 56 under supply restrictions in the face of virus fears

UNITED STATES (OBSERVATORY NEWS) — Oil rose above $ 56 a barrel on Tuesday after two days of decline, as OPEC production cuts and Libyan supplies were tied to concerns over the spread of the Coronavirus and its impact on oil demand.

Crude fell nearly 4 percent on Monday, with other commodities recording losses, while US and European shares suffered their biggest declines since mid-2016 on the back of concerns that the spread of the Coruna virus could turn into a pandemic.

Brent crude rose five cents to 56.35 dollars a barrel by 0952 GMT. The US West Texas Intermediate lost 14 cents to 51.29 dollars a barrel.

Concern that the virus will spread and undermine economic growth and demand for oil prompted Brent crude to drop by about $ 10 a barrel this year despite the involuntary suspension of most of Libya’s production as well as an agreement on supplies between the Organization of Petroleum Exporting Countries (OPEC) and its allies.

Prices received more support after lawmakers stationed in eastern Libya under the control of military commander Khalifa Hifter said on Monday that they would not participate in peace talks with politicians allied with the internationally recognized government at the moment.

But oil may come under more pressure from the latest round of supply reports in the United States.

Crude inventories are expected to rise for the fifth consecutive week. The first of two production reports for this week from the American Petroleum Institute is scheduled for release at 2130 GMT.

The Saudi Energy Minister said on Tuesday that OPEC + should not tolerate Coronavirus. Russia, a key party to any agreement, has yet to announce its stance on further cuts.

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