0255 GMT: Crude oil futures slipped during mid-morning Asian trade April 19, as concerns on the pandemic front pulled the market back after it ended higher last week on bullish data releases and improved demand forecasts.
At 10:55 am Singapore time (0255 GMT), the ICE Brent June contract was 20 cents/b (0.28%) lower than the April 16 settle at $66.57/b, while the May NYMEX light sweet crude contract was 11 cents/b (0.17%) lower at $63.02/b.
COVID-19 cases in key European economies, such as Germany and France, remain elevated, while analysts expressed further concerns over the rise in case numbers in India and Japan. India reported a record high 261,394 cases on April 17, latest data from John Hopkins University showed. The data also showed that cases in Japan have crept up to 4,802 by April 17, the highest on record since late January.
“There is no real conviction in the market that the end of the pandemic is near, and that is limiting the upside for oil,” David Lennox, resource analyst at Fat Prophets, told S&P Global Platts on April 19.
“After positive economic data releases forced a rally in oil prices last week, the market has grown cautious, and is now looking over its shoulder,” he added.
In the week ended April 16, the June contract for Brent had edged 5.91% higher to settle at $66.67/b on April 16, whereas the May contract for NYMEX light sweet crude rose 6.42% to $63.13/b.
Last week’s rise came on the back of a confluence of bullish factors, including signs of improved economic conditions in oil-consuming behemoths, namely the US and China, an improvement in OPEC’s and the International Energy Agency’s demand outlooks, and a rapidly weakening US dollar.
A rebound in economic activity in the US and China, as demonstrated by a slew of data released last week, is expected to be accompanied by an increase in oil and energy demand.
These effects are noted in the market, with ANZ analysts referencing the Department of Transportation’s data in an April 19 note, which stated that New York City’s toll traffic is set for its busiest April in seven years.
ANZ analysts also noted strong oil demand in China as its National Bureau of Statistics’ April 16 data showed a 17.8% year-on-year growth in crude throughput in Q1 to 14.17 million b/d.
While the US dollar weakness pushed the market higher last week, an appreciation in the dollar this morning has had the opposite effect. At 10:43 am, the June contract for ICE Dollar Index was trading at 91.680, up 0.149% from the previous settle.