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Oil Down as Resurgent COVID-19 Cases Continue to Fuel Demand Worries

Commodities9 minutes ago (Apr 21, 2021 12:03AM ET)

(C) Reuters.

By Gina Lee – Oil was down Wednesday morning in Asia over renewed rise in the number of COVID-19 cases globally and a surprise build in U.S. crude oil supplies renewed fuel demand worries.

Brent oil futures were down0.75% to $66.07 by 11:56 PM ET (3:56 AM GMT) and WTI futures fell 0.85% to $62.14.

The number of COVID-19 cases continues to soar in India, the third-largest oil importer, exceeding 15 million as of Apr. 21 according to Johns Hopkins University data. This led to the imposition of a six-day lockdown starting Tuesday.

In Japan, the cities of Tokyo and Osaka requested a state of emergency to curb the increasing cases. The number of COVID-19 cases has also surpassed the 142.5-million mark globally as of Apr. 21, according to Johns Hopkins University data.

On the supply side, Tuesday’s U.S. crude oil supply data from the American Petroleum Institute showed a surprise build of 436,000 barrels for the week ending Apr. 16. Forecasts prepared by had predicted a 2.86-million-barrel draw, while a 3.608-million-barrel draw was reported during the previous week.

Data from the U.S. Energy Information Administration is due later in the day.

However, with the rollout of COVID-19 vaccines and relaxed restrictive measures contributing to a rise of more than 25% for the black liquid, the Organization of Petroleum Exporting Countries and its allies (OPEC+) are expected to ease current supply cuts from May onwards.

Some investors also remained optimistic, including independent oil trader Vitol Group which is expecting fuel demand to grow as the economic recovery from COVID-19 still continues and positive demand in China. Traffic and factory activity across the biggest crude importer globally is surpassing pre-COVID-19 levels, according to data from TomTom International BV.

“This recovery is not going to be even, and we’ll get these headwinds emerging from time to time … But overall, we are still seeing a strong recovery in demand across the major regions,” Australia and New Zealand Banking Group senior commodities strategist Daniel Hynes told Bloomberg.

Oil Down as Resurgent COVID-19 Cases Continue to Fuel Demand Worries

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