Oil Down as COVID-19 Cases Continue to Rise in India

© Reuters.

By Gina Lee

Investing.com – Oil was down Friday morning in Asia, continuing Thursday’s 3% drop, as the number of COVID-19 cases in India remains near record highs and fuel demand worries continue. Meanwhile, a key network in the U.S. resumed operations after an almost weeklong closure.

fell 0.42% to $66.77 by 12:22 PM ET (4:22 AM GMT) and were down 0.33% to $63.61.

The black liquid’s drop came despite the International Energy Agency (IEA)’s forecast earlier in the week that the demand for crude oil is outpacing supply.

The number of COVID-19 cases in India, the world’s third-largest importer, topped 23.7 million cases as of May 14, according to Johns Hopkins University data.

Meanwhile, in the U.S. there were further signs that the country’s economic recovery from COVID-19 is on track, with for the week falling to a 14-month low of 473,000. U.S. inflation data for April, including the , released earlier in the week was also higher than expected.

A slowdown in commodities’ recent rally is also on investors’ minds.

“The commodity supercycle rally just hit a hard stop and the energy market doesn’t know what to make of Wall Street’s fixation over inflation and the slow flattening of the curve in India,” Edward Moya, senior market analyst at OANDA.

On the supply side, Colonial Pipeline said on Thursday that it is slowly restarting its entire pipeline system after being hit by a cyber-attack during the previous week. Although U.S. President Joe Biden reassured motorists that fuel supplies should start returning to normal during the weekend, more filling stations in the South East U.S. ran out of gasoline.

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OANDA’s Moyes remains optimistic, however.

“The crude demand story is still upbeat for the second half of the year and that should prevent any significant dips in oil prices,” he said.

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