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Oil stall due to ongoing concerns about COVID-19 fuel demand, US supply build-up surprise

© Reuters.

From Gina Lee

Investing.com – In Asia, oil declined Thursday morning as the steadily rising number of COVID-19 cases in India and Japan continued to raise fuel demand concerns.

fell 0.44% to $ 65.03 by 12:27 a.m. ET (4:27 a.m. GMT) and fell 0.47% to $ 61.06.

The market was also rocked by the US on Wednesday, which saw a surprising surge of 594,000 barrels in the week ending April 16. Investing.com’s forecasts had predicted a draw of 2.975 million barrels, while a draw of 5.889 million barrels was reported last week.

The day before showed a build of 436,000 barrels.

On the COVID-19 frontline, India, the world’s third largest oil importer, reported another record number of COVID-19 cases on Wednesday. Japan, a place that lags behind India in the import area, is also considering imposing a state of emergency in Tokyo and Osaka over rising COVID-19 cases.

“Oil prices have come under pressure this week amid growing fears that rising numbers of COVID-19 cases in India and Japan could slow the recovery in fuel demand in Asia. Market sentiment was further weighed on by weekly EIA data on a spike of US crude oil, “Toshitaka Tazawa, an analyst at the commodity broker Fujitomi Co., told Reuters.

Elsewhere, the Organization of Petroleum Exporting Countries and Allies (OPEC +) will meet in the following week, but is unlikely to lead to the current production cuts, according to Russian Deputy Prime Minister Alexander Novak.

In the meantime, Libyan National Oil Corp. extend the force majeure on Monday for exports from the port of Hariga to other facilities.

“Earlier this week the market sped up on news of Libya’s force majeure in exports, but concerns about the spread of COVID-19 in Asia now outweigh the news in Libya,” said Tazawa of Fujitomi.

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