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Oil prices drop as US economic package stumbles in US Senate

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Oil prices fell at the open in Asia on Monday after a trillion-dollar Senate proposal to help the coronavirus-hit American economy was defeated and death tolls soared across Europe and the US.

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US benchmark West Texas Intermediate initially tumbled more than three percent but then pulled back some ground to trade 1.5 percent lower, at $22 a barrel.

Brent crude, the international benchmark, fell 4.9 percent to $25 a barrel.

Prices have fallen to multi-year lows in recent weeks as lockdowns and travel restrictions to fight the virus hit demand, and top producers Saudi Arabia and Russia engage in a price war.

The latest drop came after a trillion-dollar Senate proposal to rescue the US economy was defeated after receiving zero support from Democrats, and with five Republicans absent from the chamber because of virus-related quarantines.

The measure faltered after it failed to get the necessary 60 votes in the 100-member chamber to clear a procedural hurdle after days of negotiations, with 47 senators voting in favor and 47 opposed.

Senate Majority Leader Mitch McConnell urged Democrats to stop their "obstruction," saying it was delaying aid and hurting financial markets. Democrats decried the Republican proposal as prioritizing the needs of Wall Street and corporate America over those of average people.

The bill is Congress' third effort to blunt the economic toll of a disease that has killed at least 420 people in the United States and sickened more than 33,000, leading governors to order nearly a third of the nation's population to stay at home and putting much business activity on hold.

The bill includes financial aid for regular Americans, small businesses and critically affected industries, including airlines.

Democrats raised objections to the Senate bill throughout the day, with top Senate Democrat Chuck Schumer saying it had "many, many problems" and would benefit corporate interests at the expense of hospitals, healthcare workers, cities and states.

The failure of the measure to move forward sends Democrats and Republicans back to the bargaining table. The speaker of the House of Representatives, Nancy Pelosi, said that Democrats in that chamber will begin crafting an alternative bill.

After the vote, Schumer said more money was needed for community health centres, nursing homes, masks, ventilators, personal protective equipment and aid to state and local governments.

Schumer added that "changes to the legislation are being made even as we speak" but there still were "too many problems in the legislation." He said he thought those problems could be overcome in the next 24 hours.

On the Senate floor, a visibly angry McConnell accused Democrats of obstruction.

"If we aren't able to act tomorrow, it will be because of our colleagues on the other side continuing to dicker when the country expects us to come together and address this problem," he said.

Lawmakers were mindful that a failure to reach a deal on Sunday could batter already reeling financial markets on Monday.

But Democratic Senator Joe Manchin said that would not rush Democrats into a deal they don't want.

"Markets always come back," he said.

In a sign of the disease's spread, Republican Senator Rand Paul on Sunday said he had tested positive. Republican Senators Mike Lee and Mitt Romney said they would self-quarantine as a result.

At a White House briefing on Sunday, President Donald Trump said he still had hope that a massive aid package could pass Congress swiftly.

"They are very close to getting a deal done," Trump said. "So I'd be surprised if they didn't and if they don't, I think frankly the American people will be very upset with the Democrats because the Republicans are ready to approve a deal. The only reason a deal couldn't get done is pure politics."

Vice President Mike Pence said 254,000 Americans have been tested for the virus and slightly more than 30,000 have tested positive.

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