Oil jumps on stimulus hopes after rout

Oil prices have jumped by more than seven per cent, bouncing from the biggest rout in nearly 30 years a day earlier, as the possibility of economic stimulus encouraged buying.

Russia has also signalled it may yet hold talks with OPEC about co-operation on output cuts.

US President Donald Trump on Monday pledged "major" steps to gird the US economy against the impact of the spreading coronavirus outbreak.

Japan's government said it planned to spend more than $US4 billion in a second package of steps to cope with the virus.

Oil, which plunged about 25 per cent on Monday, rebounded on Tuesday along with equities and other financial markets.

Brent futures rose $US2.49, or 7.3 per cent, to $US36.85 a barrel by 12.23pm local time on Tuesday, while US West Texas Intermediate (WTI) crude rose $US2.40, or 7.7 per cent, to $US33.53.

Brent hit a session high of $US38.22 a barrel, and US crude hit $US34.60.

Technical traders noted that neither benchmark touched the previous session's high and said the day's bounce looked like prices were consolidating in a new lower range.

"The oil price went up today because it went insanely down yesterday, and some bargain hunters are driving things up," Bjoernar Tonhaugen, head of oil markets at energy consultant Rystad, said.

"It will go down further with some days going up in between," he added.

Both benchmarks plunged on Monday to their lowest since February 2016, their biggest one-day percentage declines since January 17, 1991, at the outset of the first Gulf War.

Trading volumes in the front-month for both contracts hit record highs on Monday after Saudi Arabia, Russia and other major oil producers ended three years of co-operation to limit supply and started a price war for market share.

Austrlaian Associated PressBack to Breaking News

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