Oil pulls back from 8-week high as coronavirus cases surge in India

The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas. (Reuters)

• Brent crude and WTI both fell 1 percent on Thursday
• Oil demand is already outstripping supply, IEA said yesterday

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 IEA and OPEC predictions that demand is coming back strongly.
Brent crude was down 66 cents, or 1 percent, at $68.66 a barrel by 4:44 a.m. GMT, after gaining 1 percent on Wednesday. West Texas Intermediate (WTI) was down 67 cents, or 1 percent, to $65.41 a barrel, having risen 1.2 percent 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 International Energy Agency (IEA) said in its monthly report on Wednesday.
A day earlier, the Organization of the Petroleum Exporting Countries (OPEC) stuck to its forecast for a strong return of world oil demand in 2021, with growth in China and the United States canceling out the impact 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 professionals are still unable to say for sure when new infections will plateau and other countries are alarmed over the transmissibility of the variant that is now spreading worldwide.
Meanwhile, 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 oil consumer.
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.
“While the disruption is meaningful for local retail markets, its impact is still likely to be transient as there is no physical damage to the pipeline,” Goldman Sachs analysts wrote in a new report.