Oil prices have jumped about two per cent on media reports that scientists were developing a vaccine for the fast-spreading coronavirus , even as world health experts said treatments have not yet been found.

Also supporting oil was news that the Organisation of the Petroleum Exporting Countries (OPEC) and its producer allies were considering further output cuts to counter a potential squeeze on global oil demand.

Oil prices have bounced back due to hopes scientists will develop a vaccine to the deadly coronavirus. (AP/AAP)

The outbreak has killed nearly 500 people and is weighing on global economic activity and oil demand.

The World Health Organization played down the media reports, saying there were "no known effective therapeutics" against the virus.

Brent crude oil futures ended the session up $US1.32, or 2.5 per cent, at $US56.46 a barrel while US West Texas Intermediate (WTI) crude gained $US1.14, or 2.3 per cent, to settle at $US50.75. Both contracts rose more than 4.0 per cent during the session.

Prices held gains after data showed US crude inventories rose by 3.4 million barrels in the week to January 31, compared with expectations in a Reuters poll for a rise of 2.8 million barrels.

Scientists are working on developing a vaccine however none have been successful yet. (AAP)

"The report probably had nothing shocking enough to ruin the momentum of the big crude comeback that we are seeing today," said Phil Flynn, an analyst at Price Futures Group in Chicago.

"The main reason oil sold off as hard as it did wasn't because of what we knew; it was what we didn't know. Now, it seems like we can quantify the demand destruction and look ahead."

China's Chengjiang Daily newspaper reported on Tuesday that a team of researchers led by Zhejiang University Professor Li Lanjuan had found that drugs Abidol and Darunavir can inhibit the virus in vitro cell experiments.

Separately, Sky News reported that a British scientist has made a significant breakthrough in the race for a vaccine by reducing part of the normal development time from two to three years to only 14 days.

The virus has spread to countries around the world causing economic troubles for many. (AP/AAP)

Still, refineries including China's Sinopec, Asia's top refiner, have slashed throughput as the virus cuts demand for refined fuels.

Fears of a slump in global oil demand had pushed US crude and Brent futures into contango this week - a structure in which longer-dated oil futures trade at a premium that encourages traders to keep crude in storage for more profitable resale in the future.

"Based on our forecast that China's GDP growth will slow to just 3 per cent year-over-year in Q1 2020 and assuming that the virus is brought under control relatively quickly, we have tentatively pencilled in a 10 per cent drop in the country's oil consumption in Q1," Capital Economics analysts said in a note on Wednesday.

"This pushes the global market into a small surplus in the first half of 2020."

Medical workers hold a strike near Queen Mary Hospital to demand the government shut the city's border with China to reduce the spread of the coronavirus. (Getty)

Falling demand for jet fuel worldwide because of the deadly coronavirus has also hit US prices for the product, which dropped to their lowest seasonally in five years, market participants said.

Companies including Royal Dutch Shell and Phillips 66 have limited business travel to China.

A slowdown in the global economy resulting from the outbreak is expected to reduce 2020 worldwide oil demand growth by 300,000-500,000 barrels per day (bpd), roughly 0.5 per cent of total demand, BP's Chief Financial Officer Brian Gilvary said.

"The (Chinese) economy will be weakened for some time to come as quarantines, social distancing and travel restrictions remain in place," BNP Paribas analyst Harry Tchilinguirian told the Reuters Global Oil Forum.

A Chinese health worker checks the temperature of a woman entering a subway station during the Chinese New Year and Spring Festival on January 25, 2020 in Beijing, China. (Getty)

"But as financial markets are anticipatory, one can see how favourable news in relation to potential medical solutions, or indications that we have reached a turning point in the progress of the virus outbreak, are likely to be interpreted positively."

OPEC and allies led by Russia, a group known as OPEC+, considered the impact on global oil demand and economic growth from the coronavirus at a meeting on Wednesday.

However, Russia was not supporting a deeper oil output cut and was suggesting an extension of the current pact, a source familiar with the matter told Reuters.