Oil retreats from 9-month high as COVID-19 surge stokes demand fears By Reuters

© Reuters. FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County

By Sonali Paul and Shu Zhang

MELBOURNE/SINGAPORE (Reuters) – Oil prices eased on Friday but stayed within touching distance of nine-month highs hit in the previous session as soaring COVID-19 cases weigh on fuel demand and U.S. lawmakers battle over a $900 billion economic stimulus package.

U.S. West Texas Intermediate (WTI) crude futures slipped 17 cents or 0.4%, to $48.19 a barrel at 0513 GMT, while futures fell 26 cents, or 0.5%, to $51.24 a barrel.

More than 73.65 million people have been reported to be infected by the novel coronavirus globally and 1,654,920​ have died, according to a Reuters tally on Friday.

The spike in cases is leading to tough restrictions on travel, weighing on near-term fuel demand and market sentiment, analysts said.

Both contracts had climbed on Thursday, on optimism around progress on a COVID-19 relief bill, strong Asian refining demand and a slide in the U.S. dollar to a two-and-a-half year low. With oil priced in dollars, a weaker greenback makes oil cheaper in other currencies.

Analysts said risk appetite was still growing with the prospect of an imminent U.S. stimulus deal, which would help fuel demand, but lawmakers had yet to reach an agreement late on Thursday.

The continued rollout of vaccines is also helping protect the market from steep falls.

The U.S. Food and Drug Administration was expected to grant emergency use authorisation for Moderna (NASDAQ:) Inc’s coronavirus vaccine after emergency use was endorsed by an independent panel.

ANZ Research said with U.S. COVID-19 infections hitting new daily records, and restrictions tightening in Japan, pressure is growing on the Organization of the Petroleum Exporting Countries (OPEC), Russia and their allies, together called OPEC+.

OPEC+ plans to add 500,000 barrels per day of supply to the market in January, in the first step toward returning 2 million bpd to the market.

“While OPEC+ has shown it’s ready and willing to adapt to evolving market conditions, which should protect crudes value in the longer term, near-term challenges may still weigh on recent bullish momentum,” OANDA analyst Craig Erlam wrote in a note.

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