CommoditiesOil Prices Down From 8-Week High as Rising COVID-19 Cases In India Weakens Rally

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 IEA and OPEC predictions that demand is coming back strong.

Brent crude was down 32 cents, or 0.5%, at $69.00 a barrel by 0145 GMT, after gaining more than 1% on Wednesday.

West Texas Intermediate (WTI) was down 31 cents, or 0.5%, to $65.77 a barrel, having risen 1.2% in the previous session.

oil chart
WTI OIL Index Performance Chart

“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

Oil demand is already outstripping supply. The shortfall is expected to grow further even if Iran boosts exports, the International Energy Agency (IEA) said in its monthly report on Wednesday.

The Organization of the Petroleum Exporting Countries (OPEC), together with its allies OPEC+, stuck to its forecast for a strong return of world oil demand in 2021, with growth in China and the United States capping the impact of the coronavirus crisis in India.

Rising coronavirus cases weaken oil demand outlook

However, the 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.

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

Additionally, fuel shortages are getting worse in the southeastern United States 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 per day, said it is hoping to get a large portion of the network operating by the end of the week.

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