Oil erases early gains, settles lower as demand fears weigh
Oil declined on Monday, after earlier rising to $52 a barrel, as optimism over the U.S. stimulus package and the start of a European vaccination campaign was counteracted by weak demand and the prospect of higher OPEC+ output.
After U.S. President Donald Trump backed down from a threat to block the $2.3 trillion package, Democrats on Monday will try to push through larger $2,000 relief payments. Europe on Sunday launched a mass COVID-19 vaccination drive.
Brent crude fell 43 cents, or 0.84%, to settle at $50.86 per barrel, after trading as high as $52.02 earlier in the session. U.S. West Texas Intermediate (WTI) crude settled 61 cents, or 1.26%, lower at $47.62 per barrel.
Oil has recovered from historic lows hit this year as the pandemic hammered demand. Brent reached $52.48 on Dec. 18, its highest since March.
But the emergence of a new variant of the virus has led to movement restrictions being reimposed, hitting near-term demand and weighing on prices.
Oil remains vulnerable to any further setbacks in efforts to control the virus, said Stephen Innes, chief global market strategist at Axi, in a note.
Also coming into focus will be a Jan. 4 meeting of the Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+.
The group is tapering record oil output cuts made this year to support the market.
OPEC+ is set to boost output by 500,000 barrels per day in January and Russia supports another increase of the same amount in February.
Reference: CNBC
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