Oil prices edged up on Monday as supply jitters and US stimulus plans offset fresh concerns about the hit to global fuel demand from renewed lockdowns to curb spikes in Covid-19 infections.
Brent crude futures for March rose $0.34, or 0.6%, to $55.75 a barrel by 1008 GMT. US West Texas Intermediate crude for March was up $0.37, or 0.7%, at $52.64.
“Even though the pandemic is not yet slowing down, oil prices have good reasons to start the week with gains, as traders capitalise on a bullish cocktail of news on Monday morning,” said Bjornar Tonhaugen, Rystad Energy’s head of oil markets.
Indonesia on Sunday said its coast guard had seized the Iranian-flagged MT Horse and the Panamanian-flagged MT Freya vessels 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, while output from Kazakhstan’s giant Tengiz field was disrupted by a power outage on January 17.
Meanwhile, US lawmakers are set to lock horns over the size of a $1.9 trillion pandemic relief package proposed by new President Joe Biden.
“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.
China reported an increase in new Covid-19 cases on Monday, casting a pall over demand prospects in the world’s largest energy consumer, the main pillar of strength for global oil consumption.