Oil drops as infections stoke demand concerns

TOKYO — Oil prices were lower on Monday as rising coronavirus infections in India and other countries prompted concerns that stronger measures to contain the pandemic will hit economic activity, along with demand for commodities such as crude.

Brent crude was down by 23 cents or 0.3% at $66.54 a barrel by 4:26 GMT, after rising 6% last week. US oil was down by 27 cents or 0.2% at $62.96 a barrel, having gained 6.4% last week.

“The progress of vaccination drives in the developed markets can be seen in road traffic levels, but resurging case numbers have reversed the recovery in emerging countries such as India and Brazil,” said ANZ Research in a report on Monday.

India reported a record rise in coronavirus infections of 273,810 on Monday, increasing 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. India’s deaths from coronavirus disease 2019 (COVID-19) rose by a record of 1,619 to nearly 180,000.

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 late Sunday.

Japanese companies believe the world’s third-largest economy will experience a fourth round of coronavirus infections, with many bracing for a further blow to business, a Reuters monthly poll showed.

Japan has had far fewer COVID-19 cases than many other major economies, but concerns about a new wave of infections are rising fast, according to their responses in the poll.

A slower rollout of vaccinations compared with other Group of Seven advanced countries and the lack of a sense of crisis among the public will trigger a new wave of infections, some companies wrote in the poll.

In the United States, energy companies added oil and natural gas rigs for a fifth consecutive week for the first time since February as higher oil prices this year encouraged drillers to return to the well pad.

Last week, both the International Energy Agency and the Organization of the Petroleum Exporting Countries (OPEC) increased their forecasts for oil demand growth for 2021, citing the stronger-than-expected rebound in activity in certain economies.

Those forecasts were also supported by Wednesday’s government data that showed overall US crude inventories fell by 5.9 million barrels as refining activity picked up.

Oil has recovered from pandemic-induced lows last year, helped by record cuts to oil output by OPEC and its allies, a group known as OPEC+.

Some of the OPEC+ cuts will be eased starting in May, and the group meets on April 28 to consider further tweaks to the supply pact.

In rival producer the United States, however, the number of drilling rigs has risen to the highest level since April 2020, energy service firm Baker Hughes Co. said in its closely followed report on Friday. —