Oil falls as U.S. stimulus wrangles, surge in coronavirus cases hit sentiment

Oil prices dropped on Tuesday as fading hopes for a fast approval of new U.S. coronavirus stimulus and a surge in new COVID-19 cases raised doubts about demand recovery.

Brent crude lost 0.5%, or 28 cents, at $55.60 per barrel. U.S. crude slid 0.5%, or 25 cents, at $52.52 per barrel. Both contracts gained almost 1% on Monday.

After hitting 11-month highs, oil prices fell under pressure amid lingering doubts over demand recovery and a worsening pandemic. Prices were also offset by hopes for additional stimulus from the Biden administration.

Despite a decline in new infections in the United States, European nations still reimposed tough lockdowns, whale China posted higher daily COVID-19 cases.

Meanwhile, OPEC and its allies’ commitment to oil output cuts averaged 85% in January. The results suggest that the organization is complying better with supply commitments.