Oil prices fall as virus cases rise, demand concerns persist

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In this news, we discuss the Oil prices fall as virus cases rise, demand concerns persist

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NEW YORK (Reuters) – Oil prices fell on Tuesday as coronavirus cases around the world continued to rise, but losses were capped amid reports of an explosion in Saudi Arabia.

Brent fell 11 cents, or 0.2%, to $ 55.77 by 11:56 a.m. ET (1656 GMT), while US crude fell 30 cents, or 0.6%, to 52.47 $.

Indonesia, the world’s fourth most populous country, surpassed one million confirmed cases of the coronavirus on Tuesday, while the number of cases in the United States exceeded 25 million on Sunday, a Reuters tally showed.

Prices rose slightly after reports of an explosion in the Saudi capital Riyadh, although the cause remains uncertain.

Oil prices were also buoyant as geopolitical tensions erupted after two supertankers, along with crew members from Iran and China, were seized in Indonesian waters near the island of Kalimantan on Sunday for overdue charges. suspected illegal oil transfers.

“Prices are likely to hold back if the seizure of the Indonesian ship is resolved quickly and if today’s explosion in Saudi Arabia turns out to be an isolated incident that does not exacerbate regional tensions, therefore affecting not oil production, ”said Rystad Energy’s head of oil markets, Bjornar Tonhaugen.

“Oil demand is definitely under pressure right now and will remain so for some time until the locks are lifted and the rate of COVID-19 infection slows”

China reports an increase in COVID-19 cases, casting a shadow over the demand outlook for the world’s largest energy consumer. Elsewhere, Indian crude oil imports in December hit their highest level in more than two years.

Dimming bullish sentiment, U.S. Democrats are still trying to convince Republican lawmakers of the need for more stimulus, raising questions about when and in what form a package will be approved.

Returning the prospect of higher oil demand later in the year, the International Monetary Fund has predicted global growth of 5.5% in 2021, an increase of 0.3 percentage points from the forecast for ‘October, citing expectations of a rise in vaccines.

On the supply side, compliance by the Organization of the Petroleum Exporting Countries and its allies with promised oil production restrictions averaged 85% in January, tanker tracker Petro-Logistics said Monday, suggesting that the group has improved compliance with supply reduction commitments.

In addition, production from the giant Tengiz field in Kazakhstan, disrupted by a power cut on January 17, will be restored in the coming days, according to Tengizchevroil.

“It appears that market participants are cautiously optimistic about the producer group’s market management strategy and therefore the impending depletion of global oil stocks,” PVM analysts said.

Additional reporting by Shadia Nasralla in London and Aaron Sheldrick in Tokyo. Edited by Marguerita Choy and Mark Potter

Original © Thomson Reuters

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