Oil Falls as COVID-19 Resurgence Hammers India, Others

By Adedapo Adesanya

The price of crude oil depreciated on Tuesday, with the Brent variation crashing by 0.82 per cent or 55 cents to $66.50 per barrel as coronavirus cases in India worsened.

The United States crude benchmark, the West Texas Intermediate (WTI), was also not lucky as it deflated by 1.21 per cent or 77 cents to sell at $62.61 per barrel.

India, the world’s second-most populous country and currently the hardest hit by COVID-19, reported its worst daily death toll on Tuesday, with large parts of the country now under lockdown amid a fast-rising second wave of the virus.

The South Asian country is one of the main drivers of oil demand and one of the two main reasons prices rebounded after the worst of the pandemic but the current situation is depressing for the market.

In Europe, there are similar cases with cases on the rise in many parts of the continent despite lockdowns and curfews.

Cases are also rising in the United States, which is perhaps more worrying because the US has done well with vaccinations compared with Europe.

At more than 4 million vaccinations daily over the past week, the US vaccination drive is accelerating, but new cases are springing up.

Restrictions placed on travel worldwide also continue to clamp down on oil demand with Hong Kong planning to suspend flights from India, Pakistan and the Philippines from April 20 for two weeks.

According to reports, intensive-care units in the Manila area are at 84 per cent capacity, while 70 per cent of COVID-19 ward beds and 63 per cent of isolation beds were full as of April 19.

Overall, oil prices have recovered from historic lows last year spurred by the onset of the pandemic, helped by some demand recovery and huge output cuts by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+.

However, OPEC+ is also beginning to relax its production curbs, planning to add some 2 million barrels per day to global supply over the next three months.

US crude stockpiles were expected to have dropped for a fourth week in a row, falling by about 3 million barrels last week, according to analysts.