Oil prices drop from 1-month highs on fears of low demand

NEW YORK — Crude futures settled lower on Tuesday, pulling back from one-month highs, on fears that India, the world’s third-biggest oil importer, may impose restrictions as coronavirus infections and deaths surge to record highs.

Oil prices have risen steadily this year on expectations that demand would recover, but while the United States and China are rebounding, numerous other countries are not.

“Unless major progress is seen beyond the key industrialized nations such as the US, the pandemic factor could require some downward adjustments in global oil demand expectations for this year,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

India, the world’s second most populous country and currently the hardest hit by coronavirus disease 2019 (COVID-19), reported its worst daily death toll on Tuesday, with large parts of the country now under lockdown amid a fastrising second surge of contagion.

India’s Prime Minister Narendra Modi urged citizens to take precautions to halt the spread of COVID-19, but stopped short of imposing lockdowns.

Restrictions continue to hamper travel worldwide. Hong Kong will suspend flights from India, Pakistan and the Philippines from April 20 for two weeks.

Brent crude settled down by 48 cents or 0.7% at $66.57 a barrel. During the session it reached its highest since March 18 at $68.08. US West Texas Intermediate (WTI) crude fell by 94 cents or 1.5% to $62.44.

Crude prices rallied earlier in the session after Libya declared force majeure on exports from the port of Hariga and said it could extend the measure to other facilities, citing a budget dispute.

Hariga is scheduled to load about 180,000 barrels per day (bpd) in April. Libya’s production was hit last year after easternbased forces in that country ’s civil war blockaded oil terminals.

Overall, oil prices have recovered from historic lows last year spurred by the onset of the pandemic, helped by some demand recovery and huge output cuts by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+. A year ago today, WTI sank to minus-$40 due to a massive glut.

US crude stockpiles were expected to have dropped for a fourth week in a row, falling by about 3 million barrels last week, according to analysts in a Reuters poll.

Industry data from the American Petroleum Institute will be released at 4:30 p.m. EDT (8:30 p.m. GMT), followed by the government’s report on Wednesday. —