Oil prices steady as coronavirus lockdowns curb US stimulus optimism

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Oil prices were steady on Monday as support from US stimulus plans and jitters about supplies competed with worries about the impact on demand from renewed coronavirus lockdowns.

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Brent crude futures for March fell 8 cents, or 0.1 percent, to $55.33 a barrel by 1336 GMT. US West Texas Intermediate crude for March was down 7 cents, or 0.1 percent, at $52.20.

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“Sentiment was buoyed by expectations for a blockbuster coronavirus relief package ... (but) the tug of war between stimulus optimism and virus woes is set to continue,” said Stephen Brennock of broker PVM.

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US lawmakers are set to lock horns over the size of a $1.9 trillion pandemic relief package proposed by President Joe Biden. The stimulus would support the economy and fuel demand.

European nations, major consumers, have imposed tough restrictions to halt the spread of the virus, while China reported a rise in new COVID-19 cases, casting a pall over demand prospects in the world’s largest energy consumer.

Barclays raised its 2021 oil price forecasts, but said rising cases in China could contribute to near-term pullbacks.

“Even though the pandemic is not yet slowing down, oil prices have good reasons to start the week with gains,” said Bjornar Tonhaugen from Rystad Energy.

Supply concerns have offered some support. Indonesia said its coast guard seized an Iranian-flagged tanker over suspected illegal fuel transfers, raising the prospect of more tensions in the oil-exporting Gulf.

“A development that always benefits prices is the market turbulence that conflicts create,” Tonhaugen added.

Libyan oil guards halted exports from several main ports in a pay dispute on Monday.

Output from Kazakhstan’s giant Tengiz field was disrupted by a power outage on January 17.