Oil prices were down on Monday over ongoing concerns that the new strain of COVID-19 will hamper demand while the signing off of the US coronavirus relief bill boosted positive sentiment and capped further declines.
International benchmark Brent crude traded at $50.99 per barrel at 0632 GMT for a 0.68% increase after closing at $51.34 a barrel in the previous session.
American benchmark West Texas Intermediate (WTI) was at $48.02 per barrel at the same time for a 0.44% increase after ending the previous session at $48.23 a barrel.
Monday’s price slump was mainly spurred by demand fears driven by a new strain of COVID virus that emerged in the UK and which has since spread to 14 other countries, including Spain, Canada, Sweden, France, Germany, Denmark, the Netherlands, Switzerland, Australia, Belgium, Japan, Ireland, Singapore and Scotland.
Investors fear that the already-strict mitigation measures will tighten further due to the new virus variant.
Moreover, as an indicator of short-term production in the country, the number of US oil rigs increased by one to 264 last week compared to the previous week. This signals greater output while raising supply glut worries.
To block further declines, the positive development over a US relief bill for the general public and hard-hit businesses boosted hopes amid the economic slowdown caused by the pandemic.
US President Donald Trump signed off on a COVID-19 stimulus package late Sunday evening as well as a broader spending bill that averted a government shutdown at the eleventh hour.
The federal government was set to shutter its legion of agencies on Tuesday without Trump's approval of the bipartisan measures.
The package includes roughly $900 billion for pandemic relief as well as about $1.4 trillion to fund the federal government through September. The coronavirus relief effort includes $600 payments to most Americans and the extension of unemployment benefits for those who lost their jobs during the outbreak.