Oil mixed as stimulus optimism balances demand worries

Oil was mixed Tuesday morning in Asia, with investors weighing optimism that further stimulus measures will buoy economic growth against mounting fears for fuel demand as Covid-19-induced lockdowns continue globally.

Brent oil futures were up 0.40% to $54.95 by 9:47 PM ET (2:47 AM GMT), while WTI futures were down 0.23% to $52.30. Both Brent and WTI futures remained above the $50 mark.

There was no settlement on Monday due to it being a holiday in the US, and front-month February WTI futures will expire on Wednesday.

Positive economic data from China, the top crude oil importer globally, helped boost sentiment and showed that refinery output rose 3% to a new record in 2020. Released by the National Bureau of Statistics on Monday, the data also showed that industrial production grew 7.3% year-on-year in December. GDP rose 6.5% year-on-year in the fourth quarter but grew 2.6% quarter-on-quarter.

It also indicated that China was also the only major economy to avoid a contraction in 2020, with many nations still struggling to contain Covid-19 outbreaks. The ever-growing number of Covid-19 cases globally and the ensuing restrictive measures, including lockdowns, is dampening fuel demand and capping the black liquid’s prices.

Concerns about fuel sales in India, 2020’s third largest crude oil importer globally, falling in January from December, as well as spiking numbers of Covid-19 cases in both China and Japan that could dampen fuel demand, were raised by ANZ analysts.

“In Europe and the US, the slow rollout of vaccines is also raising concerns that a rebound in demand will remain elusive,” the analysts told Reuters.

First published on Investing.com