Crude rangebound as investors monitor pandemic, await OPEC+ meet

Singapore — 0250 GMT: Crude oil futures were rangebound during mid-morning trade in Asia April 26, as fundamentals in the market remained unchanged and investors exercised caution amid the deteriorating pandemic situation in India and Japan, and ahead of the OPEC+ meeting scheduled for later this week ending April 30.

At 10:50 am Singapore time (0250 GMT), the ICE Brent June contract had slipped 8 cents/b (0.12%) from the April 23 settle at $66.03/b, while the June NYMEX light sweet crude contract was 2 cents/b (0.03%) higher at $62.16/b.

Investors exercised caution during mid-morning trading on lingering concerns over the deteriorating pandemic situation in parts of Asia.

Japan, confronted with a rise in COVID-19 infections, has placed the Tokyo, Osaka, Hyogo and Kyoto prefectures under a state of emergency until May 11, media reports showed.

The situation in India seems even more dire, with the country reporting a record 349,691 COVID-19 infections on April 24. Over the weekend, Delhi Chief Minister Arvind Kejriwal announced an extension in the capital's lockdown until May 3, while other parts of the country, including Mumbai, also remained under lockdown.

"The market is looking at the evolving situation in India, which has raised some concerns about the demand outlook for oil in the region," Warren Patterson, head of commodities strategy at ING told S&P Global Platts on April 26.

Patterson added that the escalation of the pandemic in India, the third largest importer of crude, will be on the minds of the OPEC+ coalition when it meets on April 28 to review its earlier decision to ease production cuts from May onwards.

Analysts, including Patterson, however, ultimately believe that the meeting is likely to conclude without any surprises, and that the coalition will increase production as scheduled. Analysts, however, have cautioned that news flow from the meeting may draw attention to the impending supply increase, and consequently dampen sentiment.

Meanwhile, oil could also come under pressure due to the possibility of increased oil exports from Iran, made more likely after signs emerged that the US-Iran nuclear deal negotiations are progressing well. Iranian President Hassan Rouhani had expressed optimism on April 20 over a deal, saying the talks had progressed by around 60%-70%, and the US had signaled later in the week that it is open to easing sanctions.

"A deal could hit sentiment quite a fair bit, but the outcome may not be as bearish as some would think, as the talks have been ongoing for a while now, and Iran has already been ramping up its supply in the interim," ING's Patterson said. "The longer the talks drag on, the lesser the impact would be when a deal is reached."