By Stephanie Kelly
NEW YORK (Reuters) - Oil futures gave up early gains and settled narrowly mixed on Thursday, as OPEC and its partner Russia gave mixed signals about possible further output cuts to mitigate the impact of any weakening in global demand due to the coronavirus outbreak.
Brent crude <LCOc1> futures lost 35 cents to settle at $54.93 a barrel. U.S. West Texas Intermediate (WTI) crude <CLc1> futures rose 20 cents to settle at $50.95 a barrel.
Both contracts rose more than $1 a barrel early, then 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 panel proposed that the cut start immediately and continue until June if all members agree to it, a source said.
The Joint Technical Committee (JTC) 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 epicentre of the outbreak.
The World Health Organization (WHO) 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% this year.
(GRAPHIC: Change in Brent crude oil prices since Jan 20, 2020 - https://fingfx.thomsonreuters.com/gfx/ce/7/8459/8440/BrentCrudePriceChangeSinceJan202020.png)
Over the last two days, financial 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.
In China, short-term sales of crude oil and liquefied natural gas almost ground to a halt this week as the coronavirus slowed economic activity and cut demand.
The front-month contracts of both Brent and WTI remained in contango <LCOc1-LCOc2>, with longer-dated futures at a premium to shorter-dated contracts, indicating the market sees ample supply or falling demand for crude.
"This week's dramatic flip from backwardation to contango in the Brent term structure strongly suggests a liquidation process that has yet to be completed," Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
(GRAPHIC: Brent crude oil mkt flips to contango as coronavirus spread strangles China's oil demand - https://fingfx.thomsonreuters.com/gfx/ce/7/8457/8438/BrentCrudeContango.png)
Separately, China on Thursday said it would halve additional tariffs levied against 1,717 U.S. goods last year after the signing of a Phase 1 trade deal between the two countries.
"This makes China's goal to increase its U.S. purchases to $200 billion over the next two years more achievable," JBC Energy said in a note.
(Additional reporting by Ahmad Ghaddar in London and Aaron Sheldrick in Tokyo; Editing by Bernadette Baum and David Gregorio)