Oil prices steadied on Monday after a broad sell-off last week, as new European coronavirus lockdowns dimmed expectations of a quick economic recovery, but market players were broadly confident of a demand rebound later in the year.
Brent crude was up 29 cents or 0.45% at $64.82 a barrel while U.S. oil was unchanged at $61.42 per barrel.
Both contracts fell more than 6% last week after making steady gains for months on the back of output cuts and an expected demand recovery.
“Oil (had) its worst week this year as concerns grow over a flaring up in COVID-19 cases across Europe,” Dutch bank ING said in a note. “This comes at a time when there are clear signs of weakness in the physical oil market.”
Nearly a third of French people entered a month-long lockdown on Saturday while Germany plans to extend its COVID-19 lockdown into a fifth month, according to a draft proposal.
“Vaccination campaigns haven’t been as fast as the market had hoped for and consequently this will have an effect on the oil demand recovery, which in turn hurts prices, cutting some growth potential,” said Louise Dickson, oil markets analyst at Rystad Energy.
While a broad economic recovery remains elusive, Saudi Aramco Chief Executive Amin Nasser remains optimistic on prospects for the world’s top oil exporter later in the year.
Nasser said on Sunday that global oil demand was on track to reach 99 million barrels per day (bpd) by the end of 2021 as coronavirus vaccination programmes are rolled out.
The Organization of the Petroleum Exporting Countries (OPEC)and its allies, together known as OPEC+, have put in place unprecedented production cuts in a pact to balance global markets after demand plunged during the COVID-19 pandemic.
U.S. drillers, meanwhile, are starting to take advantage of the recent spike in prices, adding the most rigs since January in the week ending last Friday.