By Barani Krishnan
Investing.com - Oil prices tumbled as much as 2% on Tuesday on fears about a Covid resurgence in major oil consumers India and Japan, a stock market selloff and U.S. legislative attempts to try and curb production-price fixing by OPEC.
“There’s a whole bunch of stuff going on, and none of it is too good for oil,” said John Kilduff, founding partner at New York energy hedge fund Again Capital.
New York-traded West Texas Intermediate, the benchmark for U.S. crude, was down $1.16, or 1.8%, to $62.27 per barrel by 12:12 PM ET (16:12 GMT). It fell to as low as $61.54 earlier in the session.
London-traded Brent, the global benchmark for crude, was down 86 cents, or 1.3%, to $66.19. Brent hit a session low of $65.54 earlier.
The number of confirmed cases of the coronavirus-borne illness COVID-19 climbed above 142 million on Tuesday, with India occupying the second slot after the United States with more than 15 million cases.
India, the third largest crude consumer after China and India, recorded more than 250,000 new infections and over 1,700 deaths in the past 24 hours alone, casting serious concerns about the mobility of its 1.4 billion people and their demand for energy as cities in the country fell like ten pins into lockdowns.
Japan, the world’s fifth-largest energy consumer, tightened its rules on coronavirus test certificates needed to be submitted by all passengers upon arrival at Japanese airports, with those failing to meet required conditions to be denied entry into the country in principle.
The Japanese and Indian governments have decided to postpone their foreign and defense ministerial talks scheduled this weekend in Tokyo due to the Covid situations.
A selloff across equity markets exacerbated the sour mood of investors, with U.S. tech stocks falling its most in two days since a month ago.
If those weren’t enough, a U.S. legislative assembly panel reportedly passed a bill to open the OPEC oil production group and countries that work with it to lawsuits for collusion in boosting petroleum prices.
The so-called NOPEC bill, introduced by Representative Steve Chabot, a Republican, passed on a voice vote in the House Judiciary Committee. Similar bills to crack down on the Organization of the Petroleum Exporting Countries when oil prices are on the rise have appeared in Congress without success for more than 20 years. It was uncertain, however, if the legislation would be considered by the full U.S. House of Representatives chamber.
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), will come 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 2.9 million barrels during the week ended April 9, versus the drop of 3.5 million barrels noted in the previous week to April 2.
Gasoline inventories likely rose by 650,000 barrels versus the rise of 309,000 in the prior week, consensus shows.
And stockpiles of distillates, made up of diesel and heating oil, likely declined by 898,000 barrels last week after dropping 2.08 million barrels a week earlier.