Oil Prices Down As Virus Surge In India Threatens Demand

Oil prices dropped on Tuesday over fears that a COVID-19 resurgence in India could further trim demand in the country, despite price support from growing vaccination rates in major oil-consuming nations.

International benchmark Brent crude was trading at $67.53 per barrel at 0718 GMT for a 0.04% decrease after closing Monday at $67.56 a barrel.

American benchmark West Texas Intermediate (WTI) was at $64.47 per barrel at the same time for a 0.03% drop after it ended the previous session at $64.49 a barrel.

Despite signs of recovery in countries like the US, the world's third-largest oil importer, India, is still battling against a record number of virus cases.

According to the Indian Health Ministry, a total of 357,229 new cases pushed India's total to 20.28 million on Tuesday. The total virus-linked deaths reached 222,408 with 3,449 fatalities seen in the last 24 hours.

Meanwhile, the easing of restrictions in the US and Europe instilled hope of prompt economic recovery.

Air travel in the US is at an all-time high since the start of the COVID-19 pandemic more than a year ago. The vaccine rollout in the EU proved successful in reducing deaths and new cases in prosperous countries to the extent that EU officials are considering loosening restrictions on visitors to the continent.

Distributed vaccine doses have almost reached 313 million in the US with over 245 million having been administered as of early Sunday. So far, more than 104 million people, or 31.6% of the US population, have received two doses, according to the Centers for Disease Control and Prevention figures.

Some US states are preparing to lift all restrictions as enough people have been vaccinated and the number of cases is in decline.

In Florida, all local COVID-19 restrictions were suspended while in New York, New Jersey and Connecticut, restrictions on businesses, including retail stores, food services and gyms, will be lifted as of May 19.

In Los Angeles, no new coronavirus-related deaths were reported on Sunday.

Despite improved vaccination rates and a burst of fiscal stimulus, US Federal Reserve Chairman Jerome Powell said Monday that the US economy's prospects have "clearly brightened," but he emphasized the recovery from the coronavirus pandemic has been sluggish for lower-income Americans.

Investors chose to see the glass half empty when interpreting Powell's remarks, as well as data pointing to a slowdown in US manufacturing activity in April.

The Institute for Supply Management announced Monday that the US manufacturing economic expansion slowed in April as supply and labor problems remained.

The Manufacturing PMI, which measures manufacturing operation in the US, dropped to 60.7% in April from 64.7% in March. -