Oil steadies on demand recovery hopes despite European lockdowns

LONDON: Oil prices steadied on Monday after a broad sell-off last week, as new European coronavirus lockdowns dimmed hopes for a quick economic recovery, with market players still broadly confident of a demand rebound later in the year.

Brent crude was up 2 cents at $64.57 a barrel by 1201 GMT and US oil was up 13 cents, or 0.2%, at $61.55. 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.

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 is on track to reach 99 million barrels per day (bpd) by the end of 2021 thanks to ramped-up coronavirus vaccination programmes.

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.

US 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. The rig count has been rising over the past seven months and is up nearly 70% from a record low of 244 in August.