NEW YORK: Oil prices edged higher on Monday, supported by a weaker US dollar but gains were capped by concerns about the impact on demand from rising coronavirus cases in India.
Brent crude settled up 28 cents, or 0.4%, at $67.05 a barrel, after rising 6% last week. West Texas Intermediate (WTI) US oil ended the session up 25 cents, or 0.4%, at $63.38 a barrel, having gained 6.4% last week. The US dollar traded at a six-week low versus major peers on Monday, with Treasury yields hovering near their weakest in five weeks.
A weaker dollar makes oil cheaper for holders of other currencies. However, COVID-19 cases have surged in India, the world’s third biggest oil importer and consumer, dampening optimism for a sustained global recovery in demand.
“If today’s broad-based weakness in the US dollar is sustained, the energy complex should be able to maintain the bulk of last week’s gains,” said Jim Ritterbusch, president of Ritterbusch and Associates.
“The primary hazard to continued oil price strength is the possible pre-emergence of COVID-19 case counts on a broad scale ... large portions of Asia are seeing a renewed increase in cases that could force a re-appraisal of recent upward global oil demand adjustments.”
India reported a record rise in infections, which lifted overall cases to just over 15 million, making the country the second-worst affected after the United States, which has reported more than 31 million infections.
Deaths from COVID-19 in India also rose by a record 1,619 to nearly 180,000.
The capital region of Delhi ordered a six-day lockdown, joining around 13 other states across India that have decided to impose restrictions, curfews or lockdowns in their cities.
“This new wave of measures, while so far likely to be less stringent than what we saw in March 2020, when gasoline and gasoil/diesel demand in the country fell by close to 60%, is nevertheless set to weigh on transportation fuel consumption,” consultancy JBC said.
Hong Kong will suspend flights from India, Pakistan and the Philippines from April 20 due to imported coronavirus infections, authorities said on Sunday.
Lending some support, Saudi Arabia’s crude oil exports fell in February to their lowest in eight months, the Joint Organisations Data Initiative (JODI) said on Monday, as the world’s biggest oil exporter voluntarily capped output to support oil prices. JP Morgan now expects Brent prices to break the $70 mark by May, compared with September in its previous forecast, the bank said in a recent note. It still expects them to finish the year at a similar level of about $74.