India’s Covid-19 crisis tempers oil rally

Tokyo — Oil prices fell on Thursday, pulling back from an eight-week high as concerns about the coronavirus crisis in India, the world’s third-biggest importer of crude, tempered a rally driven by predictions by the International Energy Agency and oil cartel Opec that demand is coming back strong.

Brent crude was down 32 US cents, or 0.5%, at $69.00 a barrel by 1.45pm GMT, after gaining more than 1% on Wednesday. West Texas Intermediate (WTI) was down 31c, or 0.5%, to $65.77 a barrel, having risen 1.2% in the previous session.

“The path for crude prices appears to be higher but until the situation improves in India, WTI will probably struggle to break above the early March high,” Edward Moya, senior market analyst at Oanda, said in a note.

Oil demand is already outstripping supply and the shortfall is expected to grow further even if Iran boosts exports, the IEA said in its monthly report on Wednesday.

A day earlier, Opec stuck to its forecast for a strong return of world oil demand in 2021, with growth in China and the US cancelling out the effect of the coronavirus crisis in India.

But global concern is rising over the situation in India, the world’s second-most populous country, where a variant of the coronavirus is rampaging through the countryside in the deadliest 24 hours since the pandemic began.

Medical professional are still unable to say for sure when new infections will hit a plateau and other countries are alarmed over the transmissibility of the variant that is now spreading worldwide.

Fuel shortages are getting worse in the southeastern US six days since the shutdown of the Colonial Pipeline, the largest fuel pipeline network in the world’s biggest consumer of oil.

Colonial, which pipes more than 2.5 million barrels a day, said it is hoping to get a large portion of the network operating by the end of the week.

Reuters