[SINGAPORE] Oil steadied in Asian trading - after posting its first weekly loss since October - as pessimism over a new strain of Covid-19 was balanced by the passage of a US stimulus bill into law.

Futures in New York traded near US$48 a barrel after sliding 1.8 per cent last week. Tougher restrictions were extended to much of England to try and stem the virus mutation, while China suspended passenger flights to the UK American officials, meanwhile, warned of a post-Christmas surge of infections.

Crude pared earlier losses after President Donald Trump signed the long-awaited bill containing US$900 billion of virus relief for Americans.

Mr Trump had previously expressed his displeasure with the bill, which is expected to boost energy demand in the world's largest economy, that Congress approved last week.

Oil is finishing the year on a somber note as the short-term demand risk of more travel restrictions outweighs optimism over a vaccine rollout, which is already underway and will eventually boost energy demand.

The Opec+ alliance will also return 500,000 barrels a day of output to the market from January.

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"I see a very quiet market from now until the end of the year, but the direction for the next couple of days will be downward" due to the new virus strain, said Howie Lee, an economist at OCBC.

"Since it's nearing the year-end, traders are just happy to close their books."

Crude's futures curve is reflecting the pessimism. Brent's prompt timespread is five cents a barrel in contango, a bearish market structure where near-term prices are cheaper than later-dated ones. The spread was as much as 13 cents in backwardation earlier this month.

Japanese industrial production missed analyst expectations to come in unchanged last month from October, more evidence that the resurgent virus is stalling the economic recovery in some parts of Asia.

Mr Trump, meanwhile, raised geopolitical tensions in the Middle East, accusing Iran of being responsible for a rocket attack near the US embassy in Baghdad on Sunday. The Islamic Republic's Foreign Ministry said the claims were baseless. The country's oil minister said this month that Iran was planning to double its production in 2021, which will clash with Opec+ efforts to gradually increase supply without flooding the market.

BLOOMBERG