Oil slips on breather after a 9-month excessive because the COVID-19 surge fears demand

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

From Sonali Paul

MELBOURNE (Reuters) – Oil prices eased on Friday but remained within reach of the nine-month high that was hit overnight as rising COVID-19 cases weighed on fuel demand and U.S. lawmakers continued to ask for a US $ 900 billion stimulus package -Dollars fought.

US West Texas Intermediate (WTI) crude oil futures fell 7 cents, or 0.1%, to $ 48.29 a barrel at 0218 GMT, while futures fell 13 cents, or 0.3%, to $ 51.37 a barrel fell.

Both contracts had risen to two and a half year lows on Thursday amid optimism about progress on a COVID-19 relief bill, strong demand for refineries in Asia, and a drop in the US dollar. With oil prices in dollars, a weaker greenback makes oil cheaper in other currencies.

"We believe the markets are still overlooking the short-term demand pressures of rising COVID-19 cases and COVID-19 restrictions in the US and Europe," Commonwealth Bank commodities analyst Vivek Dhar said in a note.

Analysts said risk appetite would increase with the prospect of an upcoming US stimulus agreement that would fuel demand, but lawmakers had yet to reach an agreement late Thursday.

The continued adoption of vaccines is also helping to protect the market from major falls.

The U.S. Food and Drug Administration was expected to grant emergency clearance Moderna (NASDAQ 🙂 Inc's post-emergency coronavirus vaccine has been approved by an independent panel.

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

OPEC + plans to bring 500,000 barrels per day to market in January to bring 2 million bpd back to market.

"While increasing consumption in Asia and hopes of demand associated with a COVID-19 vaccine may help oil prices above this range ($ 50 to $ 60 a barrel), we believe OPEC + has sufficient reserve oil capacity to to keep oil price spikes in check, "Dhar said.

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