Oil prices are under pressure as the outbreak of the COVID-19 pandemic spreads from India to other parts of Asia, which has heightened concerns over slowing recovery in fuel demand – said Kazuhiko Saito, chief analyst at commodity broker Fujitomi Co.
New wave of COVID-19 restrictions in Asia fueled fears of declining demand
Oil prices edged down on Monday as the recovery of a major U.S. pipeline system allayed supply concerns and a new wave of COVID-19 restrictions in Asia fueled fears of a declining demand. Gasoline shortages that hit the U.S. east coast slowly eased on Sunday, with 1,000 more stations receiving supplies as Colonial Pipeline’s 8900-mile system recovered from a crippling cyberattack.
Brent crude oil futures were down 8 cents, or 0.1%, to $ 68.63 a barrel at 12:36 a.m. GMT, and West Texas Intermediate (WTI) crude was down 7 cents, or 0.1%, to $ 65.30.
Both contracts jumped nearly 2.5% on Friday and managed to post a small gain last week, marking a third consecutive weekly increase.
“Oil prices are under pressure as the outbreak of the COVID-19 pandemic spreads from India to other parts of Asia, which has heightened concerns over slowing fuel demand recovery “said Kazuhiko Saito, chief analyst at commodity broker Fujitomi Co.
“We expect Brent prices to stay within a trading range this week, with support expected at around $ 63 a barrel,” he said.
Investors have remained cautious over concerns that the highly transmissible variant of the coronavirus first detected in India could spread 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 fails to account for a crippling second wave of COVID-19 infections.
Singapore will close most schools from Wednesday after the city-state reported the highest number of COVID-19 infections in months, while Japan declared a state of emergency in three other prefectures harshly affected by the pandemic.
Meanwhile, U.S. energy companies have added oil and gas rigs for a third week in a row, with rising crude prices prompting some drillers to return to the well, energy services firm Baker Hughes Co.
In the Middle East, Israel and the ruling Hamas militant group in Gaza faced growing international calls for a ceasefire in the hostilities that entered their second week on Monday with no end in sight.
“As long as the struggle does not spill over to the oil-producing countries in the region, the impact on the oil market will be limited,” said Saito of Fujitomi.
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