Oil was down Tuesday morning in Asia, over fading hopes of further U.S. stimulus measures being quickly approved alongside ever-growing fuel demand worries as the number of global COVID-19 cases continues to rise.
Brent oil futures fell 0.48% to $55.41 by 11:25 PM ET (4:25 AM GMT) and WTI futures were down 0.36% to $52.58. Both Brent and WTI futures continued to remain above the $50 mark.
Investors are still optimistic that the $1.9 trillion in stimulus proposed by U.S. President Joe Biden will be passed through Congress. However, Democratic Majority Leader Chuck Schumer warned a comprehensive deal could be four to six weeks away, as tough negotiations with Republican lawmakers ahead.
Schumer added that some COVID-19 relief measures could be passed before former President Donald Trump’s second impeachment trial begins in early February.
Oil recently climbed to 11-month highs over stimulus expectations and economic recovery, but the ever-rising number of COVID-19 cases globally has dampened some of the enthusiasm as some countries implement restrictive measures such as lockdowns and fuel demand worries increase.
“Through 2021, major supply and demand risks remain that threaten to jolt fundamentals into a much tighter or looser market,” Citigroup (NYSE:C) said in a note.
The note also cited that the risk of higher supply if sanctions on Iranian crude are lifted, or U.S. drillers boost output from shale, against a bigger demand shock from the latest wave of lockdowns and restrictions.
China reported a slight decrease in daily COVID-19 cases with the National Health Commission reporting 82 cases on Jan. 25. However, investors are still monitoring the outbreak in the world’s top oil importer. However, demand for the black liquid remained strong in other areas. Indian crude oil imports in December rose to their highest level in more than two years, with loosed COVID-19 restrictive measures boosting economic activity in the country.
Meanwhile, there was mixed news on the supply side, with a Jan. 17 power cut resulting a disruption for output from Kazakhstan’s Tengiz field.
On a more positive note, tanker tracker Petro-Logistics said on Monday that compliance by members of the Organization of the Petroleum Exporting Countries and its allies (OPEC+) on their pledged oil production cuts is averaging an improved 85% in January.
U.S. crude oil supply data from the American Petroleum Institute is due later in the day.
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