Oil slips towards $59 as investors weigh near-term demand outlook

Oil dropped toward $59 a barrel as investors assessed the near-term demand outlook amid a Covid-19 flare-up in some regions, while a rising dollar reduced the appeal of commodities priced in the currency.

Futures in New York lost 0.5 per cent on Monday after falling 3.5 per cent last week. Federal Reserve Chair Jerome Powell told CBS’S “60 Minutes” that the US economy was poised for stronger growth, but he cautioned that the virus still remains a threat. That’s been highlighted in other regions including parts of Europe, while a second wave in India is overwhelming the health system.

Indian gasoline consumption, meanwhile, rose in March to the highest level in four months as millions of people favoured cars over public transport to avoid being infected by the coronavirus. Overall oilproduct demand fell, however.

Oil’s robust start to the year faltered in mid-march as a resurgence of Covid-19 and renewed restrictions in some regions raised concerns about the outlook for near-term fuel demand.

The market is also facing rising supply after the OPEC+ alliance agreed to add more barrels from May, although Saudi Arabia’s energy minister said the decision to boost output was the right move. Iran is also a wildcard for the market. Talks between the OPEC producer and world powers on resuscitating a 2015 nuclear accord are set to continue this week after an initial round of discussions, described by a senior US official as a good first step but still short of what’s necessary for a revival of the deal.