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Oil Prices Edge Lower as Rising COVID-19 Cases Fuels Fear Among Investors

Oil prices were lower on Monday as rising coronavirus infections in India and other countries prompted concerns that stronger measures to contain the pandemic will hit economic activity, along with demand for commodities such as crude.

Brent crude was down 23 cents, or 0.3%, at $66.54 a barrel by 0426 GMT, after rising 6% last week.

U.S. oil was down 27 cents, or 0.2%, at $62.96 a barrel, having gained 6.4% last week.

oil chart
US WTI oil Performance Chart

India reported 261,500 new COVID-19 cases on Sunday and currently has the second-highest number of cases globally after the U.S. According to Johns Hopkins University data, the number of deaths globally has also surpassed the 3 million mark as of April 19.

On Sunday, Hong Kong suspended flights from India, Pakistan and the Philippines in effect from April 20 for a two weeks period, as the first two cases of the mutated N501Y COVID-19 strain were reported over the weekend.

Japanese companies believe the world’s third-largest economy will experience the fourth round of coronavirus infections. Many bracing for a further blow to business as numbers continue to rise in Japan.

The rising infections in Japan pose a threat to oil demand as it is the world’s third-largest economy.

A slower-than-expected rollout of COVID-19 vaccines is also of concern to investors. Investors are also keeping an eye on the global crude oil supply, with data from the American Petroleum Institute due on Tuesday.

“The progress of vaccination drives in the developed markets can be seen in road traffic levels, but resurging case numbers have reversed the recovery in the emerging countries,” such as India and Brazil, ANZ Research, on Monday.

In the United States, energy companies added oil and natural gas rigs for a fifth consecutive week for the first time since February as higher oil prices this year encouraged drillers to return to the good pad.

Read also; Oil Extends Hits Four Week High on China Data and Increased Demand Outlook.