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Oil Prices Edge Lower as New Wave of COVID-19 in Asia Cripples Demand Outlook

Oil prices edged lower on Monday as the recovery of a major U.S. pipeline network eased concerns about oversupply, and a new wave of COVID-19 restrictions in Asia fuelled fears of lower demand.

Brent crude oil futures were down 8 cents, or 0.1%, at $68.63 a barrel as of 0036 GMT.

West Texas Intermediate (WTI) crude was down 7 cents, or 0.1%, at $65.30.

Oil performance
U.S WTI OIL PERFORMANCE CHART

The two contracts jumped nearly 2.5% on Friday and managed to book a small gain last week, marking a third consecutive weekly increase.

Gasoline shortages that have plagued the U.S. East Coast slowly eased on Sunday, with 1,000 more stations receiving supplies as Colonial Pipeline’s 5,500-mile  system recovered from a crippling cyberattack.

“Oil prices are under pressure as a spike in the COVID-19 pandemic is spreading from India to other parts of Asia, which increased concerns over slower recovery in fuel demand. We expect Brent prices to stay in a trading range this week, with support expected at around $63 a barrel,” Kazuhiko Saito, chief analyst at commodities broker Fujitomi Co.

Investors remained cautious on worries that the highly transmissible coronavirus variant first detected in India is spreading to other countries.

Some Indian states said on Sunday they would extend COVID-19 lockdowns to help contain the pandemic, which has killed more than 270,000 people in the country. There are fears that the nation’s annual budget may fall flat as it did not account for a crippling second wave of COVID-19 infections.

Singapore also said it will shut most schools from Wednesday after the city-state reported the highest number of COVID-19 infections in months. At the same time, Japan has declared a state of emergency in three more prefectures hit hard by the pandemic.

Meanwhile, U.S. energy firms added oil and natural gas rigs for a third week in a row as higher crude prices prompt some drillers to return to the well pad, energy services firm Baker Hughes Co BKR.N said on Friday.

In the Middle East, Israel and Gaza’s ruling Hamas militant group faced mounting international calls for a ceasefire in hostilities that entered their second week on Monday with no end in sight.