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Oil futures gave up early gains overnight as OPEC and its partner Russia gave mixed signals about possible further output cuts to mitigate the impact of the coronavirus outbreak that has amplified concerns about weak global oil demand.

Brent crude futures lost 28 cents to $US55.00 a barrel. US West Texas Intermediate (WTI) crude futures rose 19 cents to $US50.94 a barrel.

In early trading, both contracts had risen more than $US1 a barrel. They pared gains as traders waited to see whether Russia was on board with possible further output cuts along with the Organization of the Petroleum Exporting Countries and allies.

“The Russians are raining on the news,” said Phil Flynn, an analyst at Price Futures Group in Chicago. “The production cut probably is needed to get off the short-term demand destruction.”

As the coronavirus outbreak has sapped energy demand, an OPEC+ technical panel has recommended a provisional oil output cut of 600,000 barrels per day (bpd), two sources said.

The Joint Technical Committee advises the OPEC+ group but makes no decisions.

The coronavirus outbreak has resulted in quarantines and cut off thousands of flights to China. Its death toll has risen to more than 550 in China, the world’s second-largest economy and epicenter of the outbreak.

The World Health Organization said it was too early to say the disease had peaked in China, but noted that Wednesday was the first day that the number of new cases in China had dropped.

Hopes the outbreak may be settling have injected some optimism into an oil market that has fallen more than 15 per cent this year.

Over the last two days, commodities, equities and other markets have been buoyed by unconfirmed reports of a possible advance in producing drugs to counter the coronavirus. The WHO has played down reports of such breakthrough drugs.

Commodity supply chains in China have been disrupted to the extent that short-term sales of crude oil, along with liquefied natural gas, almost ground to a halt this week.

While oil prices have gained in the past two days, the front-month contracts of both Brent and WTI remain in contango , a situation where longer-dated futures trade at a premium to shorter-dated contracts, indicating the market sees ample supply or falling demand for crude.

Separately, China on Thursday said it would halve additional tariffs levied against 1,717 US goods last year after the signing of a Phase 1 trade deal between the two countries.

“This makes China’s goal to increase its US purchases to $US200 billion over the next two years more achievable,” JBC Energy said in a note.