Oil near $67 with dollar dipping and India virus cases surging

Image: Bonterra

Oil steadied near US$67/bbl today as the benefits of a weaker dollar were offset by the sweep of the coronavirus pandemic across key importer India.

Brent for June settlement traded down 0.2 per cent at $66.65/bbl as of 10:07 a.m. in London. West Texas Intermediate for May was little changed at $63.05.

Brent futures traded little changed, paring an earlier decline as the dollar slipped, making commodities priced in the currency more attractive. Yet India reported record Covid-19 infections on Monday in a further blow to fuel demand.

Last week, crude futures were boosted by a wave of positive economic data from the U.S. and China, a drawdown in stockpiles, and optimistic assessments of the prospects for consumption over 2021 from both OPEC and the International Energy Agency.

Oil has risen almost 30 per cent in 2021 in a stuttering advance as Covid vaccinations are rolled out, but infection flare-ups in some countries continue to weigh on demand. After OPEC and its allies presided over supply cuts to drain bloated stockpiles, the cartel now plans to start restoring barrels in May. Yet high global Covid-19 cases temper hopes for an imminent end to the pandemic.

“With global virus cases hitting new records, the prospect for a sustained rally at this stage seems limited,” said Ole Hansen, head of commodities strategy at Saxo Bank A/S. “Oil’s true upside potential cannot be realized before it can fire on all cylinders; that is currently not the case.”

© 2021 Bloomberg L.P.

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