Oil rises but remains rangebound as COVID-19 cases soar

Brent was up 28 cents, or 0.4%, at $62.67 a barrel by 0635 GMT, having risen to as high as $63.30 earlier

  
A general view of the PES Refinery in Philadelphia, Pennsylvania, U.S., November 2, 2020. Image used for illustrative purpose.

A general view of the PES Refinery in Philadelphia, Pennsylvania, U.S., November 2, 2020. Image used for illustrative purpose.

REUTERS/Dane Rhys

TOKYO - Oil prices rose on Monday on optimism over a rebound in the U.S. economy as coronavirus vaccinations accelerated and on tensions in the Middle East, though rising COVID-19 cases elsewhere kept a lid on prices.

Brent was up $1.02, or 1.6%, at $63.97 a barrel by 1330 GMT. West Texas Intermediate (WTI) U.S. crude rose $1.07, or 1.8%, to $60.39.

"Prices are finding support from external factors such as the weaker U.S. dollar and higher risk tolerance among investors, plus OPEC's continued good production discipline," said Commerzbank analyst Eugen Weinberg.

However, crude prices have remained rangebound in the past three weeks, with Brent between $60 and $65 a barrel and WTI at $57 to $62.

"Oil prices are entering a consolidation phase after swinging wildly last month," said oil broker PVM's Stephen Brennock.

"While there are still plenty of reasons to be bullish, market players have become more cautious as infections have surged in Europe, India and some emerging markets, while vaccine rollouts have proved slower than anticipated."

India now accounts for one in every six daily infections worldwide, with cases also rising in other parts of Asia. 

Asian oil demand remained weak and some buyers have asked for lower volumes in May, partly because of refinery maintenance and higher prices. 

The United States has fully vaccinated more than 70 million people but U.S. gasoline demand has not picked up as much as expected.

The U.S. economy is at an "inflection point" amid expectations that growth and hiring will accelerate in the months ahead, but it faces the risk of reopening too quickly and sparking a resurgence in coronavirus cases, Federal Reserve Chair Jerome Powell said in an interview broadcast on Sunday.

Prices also found some support after Yemen's Iran-aligned Houthi movement said it had fired 17 drones and two ballistic missiles at Saudi targets, including towards Saudi Aramco refineries in Jubail and Jeddah. 

There was no immediate Saudi confirmation. Saudi Aramco, the state oil firm, said when contacted by Reuters that it would respond at the earliest opportunity.

(Reporting by Bozorgmehr Sharafedin in Lonodn and Aaron Sheldrick in Tokyo Editing by David Goodman and David Evans) ((bozorgmehr.sharafedin@thomsonreuters.com; Twitter: @bozorgmehr;))

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