India and Japan Face Resurgent Coronavirus Waves
April 26, 2021
Crude oil and refined fuel product prices closed slightly over 1% higher on Friday but fell for the week.
Baker Hughes reported that oil rigs were down 1 rig, the first decline in rigs for five weeks. Drillers had been adding to the number of rigs, which had been up 80% since falling to a record low of 244 in August 2020.
India’s second COVID-19 wave has halted the country’s recovery from the pandemic, with the resurgence expected to cut fuel demand for weeks. The combined consumption of diesel and gasoline in April is expected to fall by as much as 20% on the month due to renewed restrictions.
Japan declared “short and powerful” states of emergency for Tokyo, Osaka, and two other prefectures on Friday as the country struggles to contain a resurgent coronavirus pandemic just three months ahead of the Olympics. The news about India and Japan is putting selling pressure on crude oil prices this morning.
US crude oil inventories are 1% above the five year average for this time of year. Distillates are 2% above the five year average. Propane inventories are 18% below the five year average.
OPEC+ has plans to increase production by roughly 350,000 bpd starting in May. The group meets again this week and with the resurgence of COVID-19 cases in India and Japan it will be interesting to see if this causing any concerns for the group and leads to any changes in their outlook. OPEC+ also has to consider the potential that sanctions on Iran may get lifted by the Biden Administration and that will lead to more crude supplies out of Iran.
Russia plans to increase its oil exports from its western ports to 6.74 million tons of 1.48 million bpd in May compared to 6.37 million tons in the April export plan.