Oil trims losses after Trump signs aid bill; demand concerns linger

By Koustav Samanta
SINGAPORE, Dec 28 (Reuters) - Oil pared some of its losses
from earlier on Monday after U.S. President Donald Trump signed
a $2.3 trillion coronavirus aid and spending package but
lingering worries about near-term demand weighed on market
sentiment.
Brent crude LCOc1 futures were down 25 cents, or 0.5%, to
$51.04 a barrel at 0700 GMT, having fallen as much as 1.5% to
$50.53 a barrel earlier in the session.
U.S. West Texas Intermediate (WTI) crude CLc1 futures
slipped 19 cents, or 0.4%, to $48.04 a barrel.
"With President Trump signing the bill, oil has quickly
recouped most of its losses today, although both Brent and WTI
remain modestly in the red," said Jeffrey Halley, senior market
analyst at OANDA.
The U.S. president's move was cheered as it would restore
unemployment benefits to millions of Americans and avert a
federal government shutdown. "With trading volumes thinned by the holiday week, oil is
likely to remain below the radar in coming days. That said, the
signing of the U.S. stimulus bill, with the possibility of an
increased size, should put a floor under oil prices in a
shortened week," Halley said.
But a new highly infectious variant of the coronavirus,
which was first seen in Britain and has now been detected in
several other countries, has led to mobility restrictions being
reimposed, fuelling concern over demand recovery.
The oil market would be taking cues from the virus situation
as it develops in coming days, market watchers said.
"With the world now urgently launching mass vaccination
programmes, the near-term fate for oil market might be how
quickly vaccines can close the gap in the race to contain the
new variant," Stephen Innes, chief global market strategist at
Axi, said in a note.
"Any complication on the pandemic front, whether its vaccine
logistical, or lockdown related, could be met with more selling
as January oil demand is on less solid footings, especially if
the virus situations worsen more than anticipated post-holiday,
ultimately handcuffing lawmakers."