Oil prices rose on Monday on hopes that stimulus efforts will help revitalize the U.S. economy, but the gains were capped by rising coronavirus cases and tensions between Washington and Beijing.
Brent crude LCOc1 rose 7 cents to settle at $43.41 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 rose 31 cents to settle at $41.60 a barrel.
U.S. Senate Republicans were expected to unveil a new $1 trillion coronavirus aid package on Monday afternoon.
“If we can put more money into the pockets of consumers, they’re going to spend it on goods and services,” said Phil Flynn, senior analyst at Price Futures group in Chicago. “That should lead to more gasoline demand, more travel and more shopping.”
A weak U.S. dollar, which makes dollar-denominated commodities cheaper for holders of other currencies, also helped boost oil futures. The U.S. dollar index .DXY reached its lowest level since June 2018, hurt by domestic economic concerns and deteriorating U.S.-China relations.
The renewed tensions between the world’s two largest economies following the closures of consulates in Houston and Chengdu have sent investors to safe havens, such as gold and bonds, and away from riskier assets like oil futures.
Meanwhile, global cases of the new coronavirus exceeded 16 million, and the virus is surging in areas of the United States.
While oil demand has risen after plunging in the second quarter, reimposed lockdowns because of rising infection rates have made the recovery uneven.
Brent remained on track for a fourth straight monthly gain and WTI was set to rise for a third month as supply cuts from the Organization of the Petroleum Exporting Countries and Russia provided support.