Oil holds gain near $53 as tightening supply offsets virus woes

Oil held gains near $53 a barrel as more signs of tightening supply offset concerns that a resurgent Covid-19 outbreak in some regions and a slow roll-out of vaccinations will blunt near-term demand.

Futures in New York were steady after rising 1% on Monday. Russian seaborne exports of its flagship Urals crude will drop by almost 20% in February from a month earlier, adding to lower Iraqi output and crimped Libyan shipments. Key prompt timespreads for the US benchmark and global Brent are in a bullish market structure and widening, indicating shrinking supplies.

The market, however, still faces headwinds from the virus. A flare-up in China is threatening fuel demand during the Lunar New Year period, with the government encouraging millions not to travel to prevent further spread.