Oil prices dropped on Monday as concerns over weakening fuel demand and the prospect of higher OPEC + output outweighed optimism on the US stimulus package.
Democrats targeted $ 2,000 in COVID-19 aid payments after US President signed the $ 2.3 trillion incentive deal, while oil prices strengthened earlier in the day, with Brent rising above $ 52 per barrel.
But with the new variant of the virus in the UK, hospitalizations and infections increased in parts of Europe and Africa, leading to the re-enforcement of restrictions, impacting short-term demand, and falling prices.
Brent crude settled at $50.86 a barrel, falling 43 cents, or 0.84%, after trading as high as $52.02 earlier in the session. West Texas Intermediate (WTI) crude settled at $47.62 a barrel, losing 61 cents, or 1.26%.
The market is focused on what the pandemic will bring in January, the likelihood of further lockdowns is growing, and that’s what delays plans. OPEC + including Russia will meet on January 4th, there is no option but to wait for now.
There will be a lot of focus on the demand side of the global oil balances for this week and the new year, but the supply side of the equation will become clear with OPEC + output decisions next month.
The group is reducing record oil production cuts this year to support the market. OPEC + will increase production by 500,000 barrels a day in January, and Russia is supporting another increase by the same amount in February.
Meanwhile, inventories of refined products likely rose while US crude inventories fell last week, according to a preliminary survey conducted on Monday.