Oil Dips With India & Canada Virus Cases Imperiling Demand Revival

West Texas Intermediate slid 0.6%, though remains within the $5 range it has traded in since mid-March. India, the world’s No. 3 oil importer, reported a record number of daily coronavirus cases, with states facing a vaccine shortage. In Ontario, officials issued a stay-at-home advisory, while the Tokyo government is weighing stricter curbs as a more contagious variant spreads.

Crude has been stuck in a narrow band around $60 in recent weeks. While a string of positive economic figures, particularly from the U.S., has buoyed sentiment, fresh Covid-19 outbreaks and renewed lockdowns have acted as a counterweight. Against that mixed backdrop, the Organization of Petroleum Exporting Countries and its allies have announced a roadmap to ease output curbs over three months, restoring more than 2 million barrels a day.

“The tug-of-war between short-term gloom and medium-term prosperity continues,” said Tamas Varga, an analyst at brokerage PVM Oil Associates. “The untamed rise in Covid-19 cases, on the other hand, caps every attempt to push prices significantly higher.”

With virus cases continuing to flare up in some parts of the world, the chances of a simultaneous reopening of the global economy over the northern-hemisphere summer have decreased, RBC Capital Markets analysts wrote in a report. Still, it’s possible that an easing of lockdowns could be phased around the world over the period, they said, aiding the market as fall approaches.

In India, state-run refiners are already looking to buy less crude from Saudi Arabia, with demand poised to dip amid the resurgence of Covid-19. Yet they’re also gearing up to buy Iranian crude if U.S. sanctions are eased.