Oil slips on coronavirus fears, strong dollar

Oil prices were mixed 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.

U.S. West Texas Intermediate crude settled $1.21, or 2.26 per cent, lower at $52.36 per barrel, having risen more than 1 per cent the previous session.

However, China was in stark contrast to the United States and Europe, where the spread of the coronavirus has raised doubts about how quickly economies could recover. "Vaccination campaigns, although ongoing, are lagging the speed needed to fast-track a global recovery in the first quarter and the comeback for oil demand will be slow", said Rystad Energy's head of oil markets Bjornar Tonhaugen.

"In addition to the spiraling coronavirus, this week's tense presidential inauguration may also cause unease among investors", he said.

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On Friday, both United Kingdom and US WTI (West Texas Intermediate) crude oil futures' prices plunged as much as 2 per cent with both oil contracts reporting weekly percentage drops for the first time in three weeks as concerns were mounting over another wave of pandemic outbreak in China after a number of major Chinese cities had been locked down following a recent uptick in pandemic cases.

US drillers added additional strain by placing extra oil and pure gasoline rigs to work for an eighth consecutive week final week as a result of rising costs have made manufacturing extra worthwhile.

Still, the number of operating rigs is less than half of the level of a year ago.

ANZ Research was quoted by the news agency as saying in a note that the U.S. drillers "have indicated they will continue to keep their spending under control". "The economics additionally do not favour a surge in drilling, with half of the business nonetheless uneconomical".