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Oil dips on US-China tensions, rising virus cases
NEW YORK: Oil costs edged decrease on Monday regardless of a weaker US greenback, as rising coronavirus cases and tensions between the US and China clouded the outlook for oil demand’s restoration.
Brent crude fell 25 cents to $43.09 a barrel by 12:53 p.m. EDT (1653 GMT), whereas US West Texas Intermediate (WTI) crude fell 2 cents to $41.27 a barrel.
Following the closures of consulates in Houston and Chendu, buyers frightened about relations between China and the US and have retreated to secure havens, reminiscent of gold and bonds.
“In lack of bigger elementary information, oil costs are following the general macro tendencies, behaving as a ‘dangerous asset’ and being traded decrease when safe-haven belongings strengthen,” mentioned Bjornar Tonhaugen, head of oil markets at Rystad Vitality.
In the meantime, international cases of the brand new coronavirus exceeded 16 million, and the virus is surging in areas of the US.
Whereas oil demand has risen after plunging within the second quarter, reimposed lockdowns due to rising an infection charges have made the restoration uneven.
Expectations of US stimulus measures and a weak greenback, which makes dollar-denominated commodities cheaper for holders of different currencies, capped losses.
The US greenback index reached its lowest since June 2018, harm by deteriorating US-China relations and home financial issues. A weaker greenback is usually supportive for dollar-denominated oil costs.
US Senate Republicans on Monday are anticipated to unveil a brand new $1 trillion coronavirus support package deal.
“Large financial stimulus has bullish implications for oil,” analysts from Raymond James mentioned in a observe, including that oil has traditionally moved upwards with inflation spikes and that the present US money provide enhance is unprecedented.
Brent remained on monitor for a fourth straight month-to-month achieve and WTI was set to rise for a 3rd month as provide cuts from the Group of the Petroleum Exporting Nations and Russia offered assist.