By Andres Guerra Luz and Alex Longley

Jan 14, 2021

(Bloomberg) Oil fluctuated between small gains and losses with U.S. equities staging a rally on the expectation that President-elect Joe Biden is planning Covid-19 relief of about $2 trillion.Futures traded little changed after earlier falling as much as 1.3% in New York on Thursday. Biden’s advisers recently told allies in Congress about the cost of the package, CNN reported.

Still, rising U.S. jobless claims come as a stark reminder to oil markets of the bumpy road ahead for a recovery in consumption. There are also signs that physical markets are softening in Asia, with Abu Dhabi’s Murban crude at a discount to its benchmark despite continued OPEC+ cuts.

“Bad news was good news in this case,” said Bob Yawger, head of the futures division at Mizuho Securities. “With the jobs numbers, they’re probably going to get a pretty good stimulus plan by Biden,” potentially helping crude demand.

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Oil's rally stalls near little changed after swift runup in recent weeks

Crude’s recent gains have stoked concern among some investors that the rally is ahead of itself. Technical indicators suggest oil is likely due for a pullback with the U.S. crude benchmark sitting in overbought territory. A strengthening dollar has also been reducing the appeal of commodities priced in the greenback.

Meanwhile, Europe’s oil demand is off to a sluggish start to the new year as renewed lockdowns to curb the spread of Covid-19 limit the use of road fuels.

Prices
West Texas Intermediate for February delivery fell 15 cents to $52.76 a barrel at 10:24 a.m. in New York Brent for March settlement slid 46 cents to $55.60 a barrel

In Asia, China’s economic recovery gathered pace in December as exports jumped, pushing the trade surplus to a record high. At the same time, Oil imports, however, fell about 15% compared with November.

Other oil-market news:
Iraq’s SOMO gave full contractual crude supplies to at least three refiners in Asia for February, according to company officials who were informed by the state-owned marketer. OPEC is on track with its objective to deplete the world’s bloated oil inventories. The cold snap across Asia is exacerbating a squeeze in the supply of feedstock for the region’s plastic producers just as demand climbs with the return of some of the biggest processing plants after shutdowns.

Other oil-market news:

Iraq’s SOMO gave full contractual crude supplies to at least three refiners in Asia for February, according to company officials who were informed by the state-owned marketer.
OPEC is on track with its objective to deplete the world’s bloated oil inventories.
The cold snap across Asia is exacerbating a squeeze in the supply of feedstock for the region’s plastic producers just as demand climbs with the return of some of the biggest processing plants after shutdowns.