By Barani Krishnan
Investing.com - Oil prices edged higher on Tuesday after OPEC said it hoped for demand recovery in the second half if India gets out of its Covid situation by then.
Also supporting the market were expectations that the U.S. government will report a second straight weekly drawdown in crude stockpiles, and pump prices of gasoline at seven-year highs after the shutdown of the country’s largest fuel pipeline due to a cyberattack.
Offsetting some of the positive sentiment was the festering coronavirus situation in India, the third largest importer of oil.
“The Covid crisis in India, which shows few signs of easing, is adding to the oil market’s woes. The seven-day average of new daily cases is at a record high, and global health authorities are already warning over the country’s variant, which is of international concern,” said Sophie Griffiths, who heads U.K. and EMEA research at online broking portal OANDA. “Pressure continues to mount on Prime Minister Narendra Modi to impose a national lockdown in a bid to contain surging cases.”
States in Southern India have threatened to stop sharing medical oxygen with each other, fiercely protective about holding on to whatever they have as their hospitals swell with the sick, and infections skyrocket.
The United States remains the most Covid-infected country with more than 32.7 million positive cases and over 582,000 deaths since the global outbreak of the pandemic in March 2020. But India has quickly caught up as number two in just over a month, having 23 million cases and almost 250,000 deaths.
OPEC on Tuesday stuck to its prediction of a strong recovery in world oil demand in 2021 as growth in China and the United States counters the Covid crisis in India.
The Organization of the Petroleum Exporting Countries said In a monthly report that demand will rise by 5.95 million barrels per day this year, or 6.6%, just as it forecast last month. The report however warned of "significant uncertainties," mainly around the pandemic.
New York-traded West Texas Intermediate, the benchmark for U.S. crude, settled up 36 cents at $65.28 per barrel.
London-traded Brent, the global benchmark for crude, finished up 23 cents, at $68.55.
Separately, the oil trade will be looking out later in the day for an idea of what last week’s crude and petroleum stockpiles might have been from an inventory snapshot due from the API, or American Petroleum Institute.
The API snapshot, scheduled for release at 4:30 PM ET (20:30 GMT), comes before Wednesday’s official report from the U.S. Energy Information Administration on supply-demand of petroleum products for the week ended April 16.
According to a consensus of analysts tracked by Investing.com, U.S. crude crude stockpiles likely fell by 2.8 million barrels during the week ended May 7, versus the drop of 8. million barrels noted in the previous week to April 30.
Gasoline inventories likely rose by 600,000 barrels versus the rise of 737,000 in the prior week, consensus shows.
And stockpiles of distillates, made up of diesel and heating oil, likely declined by 1.1 million barrels last week after dropping 2.9 million barrels a week earlier.