Oil Falls Amid a Row Over US Stimulus And a Spike in Covid-19 Cases

Oil prices plunged on Tuesday, January 26th, as the chances for rapid approval of a new economic stimulus receded in the United States, while a surge in coronavirus cases raised doubts about the pace of any recovery in demand.

Brent crude fell 28 cents, equivalent to 0.5%, to more than $ 55 during the session, while US crude fell 26 cents, or 0.5%, to more than $ 52. The two benchmarks rose about 1% on Monday.

After recently rising to its highest level in 11 months, oil finds itself trapped between persistent doubts about a recovery in demand at a time when the pandemic continues to spread, while mitigating the impact of that optimism that more stimulus from the new US administration headed by Joe Biden will support economic growth. Parallel to the distribution of vaccines.

But Biden administration officials are still seeking to convince Republican lawmakers of the need for more stimulus, raising questions about when it will be passed.

Even with the decrease in the frequency of new infections in the United States, European countries impose tight restrictions to combat the spread of the virus, while China announces an increase in new cases of Covid-19, which casts doubts on the demand prospects for the largest energy consumer in the world. But demand for oil remains strong in some areas.

In India, crude oil imports increased in December to their highest levels in more than two years as the coronavirus restrictions eased, boosting economic activity.

On the supply side, Petro-Logistics said on Monday that the compliance rate of the Organization of the Petroleum Exporting Countries and its allies with promised oil production cuts averaged 85% in January.