Oil rises 1% on hopes of US stimulus and supply concerns

NEW YORK (Reuters) – Oil prices rose roughly 1% on Monday as optimism about U.S. stimulus plans and some supply concerns pushed futures, but demand concerns pushed by coronavirus freezes they have limited earnings.

Brent crude oil futures rose 47 cents, 0.9%, to $ 55.88 a barrel. US West Texas Intermediate crude closed at 50 cents, or 1%, up at $ 52.77 a barrel.

Administration officials of US President Joe Biden in a Sunday call with Republican and Democratic lawmakers tried to avoid Republican concerns that his $ 1.9 trillion pandemic relief proposal was too expensive.

“The newly inaugurated President Biden appears to be pushing for swift approval of his proposed $ 1.9 trillion pandemic aid package, a development interpreted by the market as a clear indication that the new US administration aims to kick-start an economic recovery. which of course will benefit fuel consumption, “said Bjornar Tonhaugen, head of oil markets at Rystad Energy.

On the supply side, the Organization of Petroleum Exporting Countries and its allies adherence to the promised oil production limits averaged 85 percent so far in January, oil tanker Petro-Logistics said Monday. Data suggests the group has improved its adherence to promised bid limits.

In Indonesia, the country said its coast guard seized an Iranian-flagged tanker on suspected illegal fuel transfers, raising the prospect of further tension in the oil-exporting Gulf.

Production from Kazakhstan’s gigantic Tengiz camp was cut off by a power outage on January 17.

Meanwhile, European nations have imposed stiff restrictions to stop the spread of the virus, while China has reported an increase in new COVID-19 cases, casting a pallor on the prospects for demand in the world’s largest energy consumer.

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

Stephanie Kelly’s reportage in New York; additional reportage by Noah Browning in London; Editing by Marguerita Choy and David Evans