London — Oil prices held steady on Monday as a better than expected quarterly rebound for China’s economy countered fears over soaring COVID-19 cases around the world and tight restrictions that could dent economic growth and fuel consumption.
Brent crude gained 3 cents, or 0.1%, at $55.13 a barrel by 0938 GMT while U.S. oil was up 2 cents, or less than 0.1%, at $52.38.
China’s economy picked up in the fourth quarter, with growth beating expectations as it ended a coronavirus-hit 2020 in remarkably good shape and remained poised to expand further this year even as the pandemic raged unabated.
However, China was in marked contrast to the U.S. and Europe, where the spread of coronavirus has raised doubts over how soon economies could recover.
“Corona-induced economic fears, a stronger U.S. dollar and more pessimistic investor sentiment are all playing their part in the fact that Brent is trading … around $3 lower than last Wednesday,” said Commerzbank analyst Eugen Weinberg.
Security concerns ahead of this week’s U.S. presidential inauguration are also dragging on investor sentiment, said PVM Oil analyst Tamas Varga.
“In addition to the coronavirus running amok, this week’s tense presidential inauguration can also cause unease amongst investors,” he said.
U.S. drillers last week put more oil and natural gas rigs to work for an eighth consecutive week, encouraged by recent price strength that made production more profitable, though the number of operating rigs is still less than half the level of a year ago.
U.S. drillers have indicated they will continue to keep their spending under control, ANZ Research said in a note.
“The economics also don’t favour a surge in drilling, with half of the industry still uneconomical,” they said.
Oil prices also found support in a drop in Libyan oil output, with Waha Oil Company reducing production by up to 200,000 barrels per day because of maintenance on the main pipeline that links the Al-Samah and Al-Dhahra oilfields to Es Sider port.
*Bozorgmehr Sharafedin; Aaron Sheldrick; Editing: David Goodman – Reuters