This paper investigates the use of wind farms equipped with direct- derive permanent magnet synchronous generators (PMSG-WTs) to damp inter-area oscillations in power systems with high wind power penetration. For this purpose this work addresses the use of a supplementary control loop to be added to the conventional vector control system of PMSG-WTs. The performance of the supplementary damping control loop is evaluated, employing modal analysis and time domain simulations on a two area power system test case.