U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging lower on Monday as renewed concerns over rising COVID-19 infections in India and other countries would dampened the on-going demand recovery. However, a weaker U.S. Dollar may be limiting losses. Crude oil is a dollar-denominated commodity that tends to be supported by foreign buyers when the dollar loses value.
COVID Cases in India on the Rise
According to reports from Reuters, India reported a record rise in coronavirus infections on Monday 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. Meanwhile, deaths from COVID-19 in India also rose to nearly 180,000.
The capital region of Delhi ordered a six-day lockdown on Monday, joining around 13 other states across the country that have decided to impose restrictions, curfews or lockdowns in their cities, Reuters wrote.
“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.
In other COVID-related news, Hong Kong will suspend flights from India, Pakistan and the Philippines from April 20 due to imported coronavirus infections, authorities said in a statement on Sunday. This will put a further dent in jet fuel demand in the region.
World Health Organization Issues New Warning
The World Health Organization (WHO) warned Friday that the global tally of confirmed cases of the coronavirus-borne illness COVID-19 has almost doubled in the last two months, and is now approaching the highest rate seen since the start of the pandemic. Case numbers are climbing in nearly all regions, including the Americas, with India, Brazil, Poland and Turkey becoming hot spots.
Demand concerns are the major story on Monday, but traders are also keeping an eye on talks between the U.S. and Iran amid negotiations toward a new nuclear accord. Traders fear that a new deal between the two countries will mean more Iranian oil will hit the market, raising global supplies.
Traders are also assessing the potential impact of the U.S. sanctions imposed on Russia on the energy trade. Russia is one of the world’s biggest producers of crude and a member of OPEC+.
Finally, on Friday, Baker Hughes released its weekly report that showed the number of active U.S. rigs drilling for oil was up 7 last week at 344. This raises concerns over higher production and more supply.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire