Crude oil prices settled at one-week lows April 20 as new lockdowns in parts of India, one of the world's largest energy consumers, weighed on global demand while progress on US-Iran nuclear talks added risks to supply outlooks.
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NYMEX May WTI settled 94 cents lower at $62.44/b and ICE June Brent declined 48 cents to $66.57/b.
Rising COVID-19 infections in Asia's third-largest economy, India, continue to weigh on global demand recovery outlooks.
On April 19, India - the second worst-hit country by the virus globally - reported 273,810 new cases of COVID-19, a record high, according to John Hopkins University data.
Indian officials have already imposed weeklong lockdowns in many parts of the country in a bid to contain the surge in COVID-19 cases, but the government shied away from imposing a complete national lockdown on April 20.
India is well prepared to combat the pandemic, compared to last year's first wave, Prime Minister Narendra Modi said in an address to the nation April 20, citing efforts to accelerate the world's largest vaccination program.
Oil prices had moved sharply lower midday on concerns that Modi would announce a revived lockdown, but later recouped some of these losses.
NYMEX May RBOB settled 2.71 cents lower at $2.0174/gal and May ULSD declined 1.24 cents to $1.8801/gal.
Apple Mobility data shows driving activity nationwide in India has plunged around 34% from mid-March, with respective declines of 48% and 57% over the same period in Delhi and Mumbai.
"A key oil refiner in India was said to be slashing rates as the virus rapidly spreads and lockdowns pummel fuel use," said Avtar Sandu, senior manager for commodities at Phillip Futures, in an April 20 note.
A stronger dollar also added headwinds to oil prices. The ICE US Dollar Index climbed to 91.175 in afternoon trading, rallying off a six-week low of 91.05 on April 19.
Supply side risks were also in focus during the trading session.
The US House Judiciary Committee on April 20 advanced the No Oil Producing and Exporting Cartels, or NOPEC, Act which, if enshrined into law, would amend the Sherman Antitrust Act to make it illegal for "any foreign state to act collectively with others to limit production, fix prices, or otherwise restrain trade with respect to oil, natural gas, or other petroleum products." Only the Justice Department would be able to enforce the provision.
Versions of the bill have been introduced in every Congress for the past two decades, typically when oil prices are on the rise.
Meanwhile signs of progress in US-Iran nuclear negotiations added further pressure to crude prices.
Despite Iran announcing April 13 that it will begin enriching uranium to 60% purity, in gross violation of the nuclear deal, Iranian President Hassan Rouhani said April 20 that the talks in Vienna had progressed by around 60%-70%, according to media reports.
A breakthrough in negotiations could see the lifting of US sanctions on Tehran's energy sector, adding more crude to a market that's recovery has been carefully managed by OPEC and its allies. The sanctions have severely hamstrung Iran's crude production, which averaged 2.30 million b/d in March, according to the latest S&P Global Platts survey of OPEC output. That is down from more than 3.8 million b/d prior to the sanctions being re-imposed in 2018 when the US withdrew from the deal.
"Greater than the threat of a further slowdown in India and Brazil is the possibility of Iranian oil returning to the market quickly," BCS' senior oil and gas analyst Ron Smith said.