On Monday crude oil pared some of its losses from earlier after U.S. President Donald Trump signed a $2.3 trillion coronavirus aid and spending package but lingering worries about near-term demand weighed on market sentiment.
Brent crude futures were down 25 cents, or 0.5%, to $51.04 a barrel at 0700 GMT, having fallen as much as 1.5% to $50.53 a barrel earlier in the session. U.S. West Texas Intermediate (WTI) crude futures slipped 19 cents, or 0.4%, to $48.04 a barrel.
“With President Trump signing the bill, oil has quickly recouped most of its losses today, although both Brent and WTI remain modestly in the red,” said Jeffrey Halley, senior market analyst at OANDA. The U.S. president’s move was cheered as it would restore unemployment benefits to millions of Americans and avert a federal government shutdown.
“With trading volumes thinned by the holiday week, oil is likely to remain below the radar in coming days. That said, the signing of the U.S. stimulus bill, with the possibility of an increased size, should put a floor under oil prices in a shortened week,” Halley said.
But a new highly infectious variant of the coronavirus, which was first seen in Britain and has now been detected in several other countries, has led to mobility restrictions being reimposed, fuelling concern over demand recovery. The oil market would be taking cues from the virus situation as it develops in coming days, market watchers said.
“With the world now urgently launching mass vaccination programmes, the near-term fate for oil market might be how quickly vaccines can close the gap in the race to contain the new variant,” Stephen Innes, chief global market strategist at Axi, said in a note.