Oil Down as Ever-Rising COVID-19 Numbers in India Fans Fuel Demand Worries

Oil was down Thursday morning in Asia over concerns about the ever-surging numbers of COVID-19 cases in India and after the U.S. released a draw of crude inventory.

Brent oil futures fell 0.94% to $68.67 by 12:26 AM ET (4:26 AM GMT) and WTI futures slid 0.98% to $65.43.

Wednesday’s U.S. crude oil supply data from the U.S. Energy Information Administration showed a draw of 427,000 barrels for the week ending May 7. The draw was smaller than both the 2.817-million-barrel draw in forecasts prepared by Investing.com and the 7.990-million-barrel draw recorded during the previous week.

Crude oil supply data from the American Petroleum Institute the day before showed a draw of 2.533 million barrels.

The demand for crude is outpacing supply, the International Energy Agency (IEA) said in its monthly report released on Wednesday. The report added that the discrepancy will grow further despite Iran boosting exports.

IEA’s report comes a day after the Organization of the Petroleum Exporting Countries (OPEC) said that it continued to expect a strong fuel demand recovery in 2021 as China and the U.S. continue their economic recoveries from COVID-19.

However, the total number of COVID-19 cases in India, the third-biggest crude importer globally, topped 23.3 million as of May 13, and the high numbers continued to fan fuel demand recovery worries.

“The path for crude prices appears to be higher but until the situation improves in India, WTI will probably struggle to break above the early March high,” Edward Moya, senior market analyst at OANDA, said in a note.

On the supply side, the southeastern U.S. region is facing a worsening fuel shortage six days after the closure of Colonial Pipeline’s networks due to a cyberattack during the previous week.