Covid Concerns Maintain Oil Price Pressure

Oil futures dipped on Wednesday as the market digested a report on petroleum inventories in the US while the resurgent spread of Covid-19 in Asia continued to provide headwinds. Data from the US Energy Information Administration (EIA) show commercial crude stocks in the world’s largest economy swelled by 600,000 barrels to 493 million bbl in the week ended Apr. 16. Inventories at the Nymex pricing point of Cushing, Oklahoma, were down 1.3 million bbl at 45.4 million bbl. The overall build came amid a slight decrease in refinery throughputs and net exports. Domestic production remained level at around 11 million barrels per day. However, that same data implied that US gasoline demand breached 9 million b/d for the first time since late in the third quarter of last year. Gasoline inventories stand at 235 million bbl nationwide, down over 28 million bbl from the same time in 2020 and just ahead of a seasonal surge in demand for the fuel. Traders said the higher gasoline demand could entice refiners to open the throttle, a development that would drain stocks and help support prices. Selling accelerated later in the session as the dollar bounced off of lows against a basket of other currencies. A strong dollar tends to have an inverse correlation with oil prices. In London, Brent crude for June delivery settled down $1.25 at $65.32 per barrel. In New York, June West Texas Intermediate (WTI) fell $1.32 to close at $61.35/bbl. Asia in Focus Market players are keeping a close eye on developments in the Asia-Pacific, where a jump in Covid-19 infections is casting a pall on the demand outlook. Several Indian states have entered quarantine, as has the city of Tokyo. “Renewed worries over demand saw prices reverse on Tuesday, and more losses could be on the way if the situation in India deteriorates,” said Fawad Razaqzada of ThinkMarkets. An expected dip in Chinese crude imports is also taking a toll. “Many market players expect a further slowdown in oil imports and refinery demand as Chinese refiners enter into the planned spring maintenance this month,” noted Stephen Brennock of oil brokerage PVM, adding that imports had already declined from February to March. “The market is currently preoccupied with when oil will hit $70. In truth, it should be concerned over the potential fallout from the impending lull in China’s crude import growth.” Frans Koster, New York