Oil falls as U.S. stimulus squabbles, coronavirus surges sour mood | Reuters

Oil falls as U.S. stimulus squabbles, coronavirus surges sour mood | Reuters

Oil prices dropped on Tuesday as the prospects for the rapid approval of new U.S. economic stimulus waned while increasing new coronavirus infections raised questions over the pace of any recovery in demand.

Brent crude was down 28 cents, or 0.5%, at $55.60 by 0747 GMT, while U.S. crude fell 26 cents, or 0.5%, to $52.51. Both rose nearly 1% on Monday.

Having recently hit 11-month highs, oil is caught between lingering doubts over any recovery in demand as the pandemic continues to rage, offset by optimism for more stimulus from the newly installed Biden administration in the United States to support economic growth as vaccines are rolled out.

But Biden administration officials are still trying to convince Republican lawmakers of the need for more stimulus, raising questions over when it will be approved.

“The negative sentiment sweeping Asia today, as the reality of U.S. stimulus politics dawns, has seen both contracts move lower,” said Jeffrey Halley, senior market analyst at OANDA.