Oil gains 1% as short-sellers take profit

Oil prices rose more than 1% on Tuesday as recent sharp falls have encouraged investors holding short positions to book profits, but the market remains jittery over the Wuhan virus, which has now killed more than 1,000 in China.

Brent crude rose 79 cents, or nearly 1.5%, to $54.06 a barrel by 0216 GMT, while U.S. West Texas Intermediate was up 63 cents, or about 1.3%, to $50.20.

While the virus outbreak is hurting China's economy - and others affected such as Japan and Singapore - San Francisco Federal Reserve Bank President Mary Daly, said the coronavirus impact on the US economy has been limited.

Worries about the virus's impact on oil demand, however, and rising U.S. oil supplies will likely cap price gains.

US crude oil inventories were estimated to have risen by 2.9 million barrels in the week to Feb. 7, a preliminary Reuters poll showed on Monday, which would make it the third week in a row where stock levels have increased.