Oil prices eased on Tuesday as coronavirus cases globally continued to rise, but losses were capped amid reports of a blast in Saudi Arabia.
Brent crude was down 11 cents, or 0.2%, at $55.77 by 11:56 a.m. ET (1656 GMT,) while U.S. crude fell 30 cents, or 0.6%, to $52.47.
Indonesia, the world’s fourth-most-populous country, surpassed a million confirmed coronavirus cases on Tuesday while the number of cases in the United States crossed 25 million on Sunday, a Reuters tally showed.
Prices edged up after reports of a blast in the Saudi Arabian capital Riyadh, although the cause remains unclear.
Oil prices were also supported as geopolitical tensions flared after two supertankers, with crew members from Iran and China, were seized on Sunday in Indonesian waters near Kalimantan island for suspected illegal oil transfers.
“Prices are likely to hold back if the Indonesian vessel seizure gets resolved quickly and if today’s blast in Saudi Arabia proves to be an isolated incident that does not escalate regional tensions, consequently not affecting oil output,” said Rystad Energy’s head of oil markets, Bjornar Tonhaugen.
“Oil demand is definitely under pressure currently and will be for a while until lockdowns are lifted and COVID-19 infection speed slows down”
China is reporting rising COVID-19 cases, casting a pall over demand prospects in the world’s largest energy consumer. Elsewhere, Indian crude oil imports in December rose to their highest in more than two years.
Dampening bullish sentiment, U.S. Democrats are still trying to convince Republican lawmakers of the need for more stimulus, raising questions over when and in what form a package will be approved.
Raising the prospect of higher oil demand later in the year, the International Monetary Fund predicted global growth of 5.5% in 2021, an increase of 0.3 percentage points from the October forecast, citing expectations of a vaccine-powered uptick.
On the supply side, the Organization of the Petroleum Exporting Countries and its allies’ compliance with pledged oil output curbs is averaging 85% in January, tanker tracker Petro-Logistics said on Monday, suggesting the group has improved compliance with supply curb commitments.
Also, output from the giant Tengiz field in Kazakhstan, disrupted by a power cut on Jan. 17, will be restored over the next few days, according to Tengizchevroil.
“It appears that market players are cautiously sanguine about the producer group’s market management strategy and therefore about the imminent depletion in global oil inventories,” PVM analysts said.