Oil extends loss Friday on India COVID-19 cases (Update)


Brent crude oil futures were down 35 cents, or 0.5%, at US$66.70 a barrel by 0200 GMT, while West Texas Intermediate (WTI) was down 28 cents, or 0.4%, at $63.54 a barrel

SINGAPORE: Oil prices fell on Friday after dropping about 3% a day earlier as coronavirus cases remained high in major oil consumer India and as a key fuel pipeline in the United States resumed operations after being shut due to a cyber attack.

Brent crude oil futures were down 35 cents, or 0.5%, at US$66.70 a barrel by 0200 GMT, while West Texas Intermediate (WTI) was down 28 cents, or 0.4%, at $63.54 a barrel.

"The commodity super cycle rally just hit a hard stop and the energy market doesn't know what to make of Wall Street's fixation over inflation and the slow flattening of the curve in India," said Edward Moya, senior market analyst at OANDA. India is the world's third biggest oil consumer.

"The crude demand story is still upbeat for the second half of the year and that should prevent any significant dips in oil prices," he added.

Prices came under pressure as a broader surge in commodity prices, labor shortage and much stronger-than-expected U.S. consumer prices data this week stoked inflation concerns that could force the Federal Reserve to raise interest rates.

Raising rates typically boosts the U.S. dollar, which in turn pressures oil prices because it makes crude more expensive for holders of other currencies.

India recorded more than 4,000 COVID-19 deaths for a second straight day on Thursday as infections stayed below 400,000, with experts unsure when numbers will peak.

In the United States, President Joe Biden reassured motorists that fuel supplies should start returning to normal this weekend, even as more filling stations ran out of gasoline across the Southeast nearly a week after a cyber attack on the nation's top fuel pipeline.

Colonial Pipeline said late on Thursday it had restarted its entire pipeline system and had begun deliveries in all of its markets.

Traders were also watching the situation in the Middle East after Israel fired artillery and mounted more air strikes on Friday against Palestinian militants in the Gaza Strip amid constant rocket fire deep into Israel's commercial centre.

- Reuters

Previous report

Oil drops 3% on India's COVID-19 crisis

NEW YORK: Oil prices fell about 3% on Thursday as India's coronavirus crisis deepened and a key U.S. fuel pipeline resumed operations, halting a rally that had lifted crude to an eight-week high after forecasts for a rebound in global demand later in the year.

Brent crude ended the session down US$2.27, or 3.3%, at $67.05 a barrel, after rising 1% on Wednesday. West Texas Intermediate (WTI) settled $2.26, or 3.4%, lower at $63.82 a barrel, having risen 1.2% in the previous session.

Both benchmarks marked their biggest daily drops in percentage terms since early April.

Prices also came under pressure as a broader surge in commodity prices, labor shortage and much stronger-than-expected consumer prices data this week have stoked inflation concerns that could force the U.S. Federal Reserve to raise interest rates.

Raising rates typically boosts the U.S. dollar, which in turn pressures oil prices because it makes crude more expensive for holders of other currencies.

"Crude prices have steadily declined as investors hit the pause button with super commodity cycle trade," said Edward Moya, senior market analyst at OANDA.

"Inflationary fears have unnerved some investors into taking some profit off the table with their energy trades."

U.S. President Joe Biden said motorists can expect filling stations to begin returning to normal this weekend even as shortages gripped some areas amid restart of the country's top fuel pipeline network after it was shut by a ransomware attack.

The nearly-week long shutdown of the Colonial Pipeline, which carries 100 million gallons per day of fuel, caused gasoline shortages and emergency declarations from Virginia to Florida, led two refineries to curb production, and spurred airlines to reshuffle refueling operations.

In another bearish signal for oil demand, a variant of the coronavirus has swept through India, the world's third-biggest importer of crude.

Medical professionals have not been able to say when new infections will plateau and other countries are alarmed over the transmissibility of the variant that is now spreading worldwide.

"Concerns are growing that the untamed spread of the coronavirus in India and in Southeast Asia will dent oil demand," PVM analysts said in a note.

"Its impact, however, is expected to be relatively brief and the second half of the year will see the healthy revival of oil demand growth."

- Reuters

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3

Oil price , Brent , U.S. oil , WTI , India , coronavirus , US , pipeline ,

   

Next In Business News

Australian central bank among those hit by widespread internet outages
Euro Holdings cancels proposed bonus issue after steep plunge
CPO futures reverses gains as India puts import tax cut plans on hold
Advancecon buys 51% stake in loss making quarry operator for RM30.4mil
MSM says sugar demand stable despite lockdown
N. American oil service firms' pricing and hiring on the upswing
FBM KLCI falls for third straight day, down 7.46 points
Govt approves wage subsidy applications worth RM1.215bil as at June 4
Zafrul: RM12.12bil approved under SME soft loan fund as at June 4
Crude oil prices fall on stronger U.S. dollar

Stories You'll Enjoy


Vouchers