Oil futures edged higher Friday, but remained on track for weekly declines as worries about a surge in COVID-19 cases in India and Japan in particular contribute to concern over the demand outlook.
West Texas Intermediate crude for June delivery
the global benchmark, rose 23 cents, or 0.4%, to $65.63 a barrel on ICE Futures Europe.
For the week, WTI was on track for a loss of 2.2%, while Brent was off 1.7%. The weaker tone has been tied in large part to a surge in COVID-19 cases in India and and Japan.
India, one of the world’s largest oil importers, saw more than 330,000 cases in a 24-hour period, setting a global record for a second day. In Japan, Tokyo is expected to suffer another lockdown shortly.
India and Japan are the world’s third and fourth largest oil importers respectively, after China and the U.S.
“The explosion in Indian COVID cases remains one of the key near-term risks plaguing what we would deem as an otherwise reasonably constructive backdrop for investor sentiment,” said Michael Tran, analyst at RBC Capital Markets, in a note.
Indian Prime Minister Narendra Modi “has prioritized economic activity and urged states to use lockdowns as a last resort, but curbing consumption inevitably leaves the Asian product market soggy, thus weighing on refinery margins (and perhaps future crude demand), particularly as Chinese gasoline exports are near all-time highs,” Tran wrote.