New Covid-19 strain in India restrain oil prices

New Covid-19 strain in India restrain oil prices

Oil prices rose on Friday, reversing some of the previous day's sharp losses as stock markets strengthened and the U.S. dollar slipped, though gains were capped by the coronavirus situation in major oil consumer India. Brent crude oil futures were up $1.23, or 1.8%, at $68.28 a barrel by 1349 GMT and West Texas Intermediate (WTI) crude was up $1.12, or 1.8%, at $64.94. The two contracts lost about 3% on Thursday, Reuters notes.

Global equities rose and the dollar slipped on Friday after U.S. Federal Reserve officials said there would be no imminent move to tighten monetary policy in the world's biggest economy.

As oil is priced in dollars, a weaker greenback makes the commodity cheaper for holders of other currencies, potentially spurring demand.

The U.S. Commerce Department said April retail sales stalled following a 10.7% surge in March, an upward revision from the previously reported 9.7% increase. 

Oil prices have come under pressure this week from surging coronavirus cases in India as well as worries that the highly transmissible variant first detected there is spreading to other countries.

India today reported 343,144 new coronavirus cases, taking its overall tally past the 24 million mark, while deaths from COVID-19 rose by 4,000. 

India’s population is over 1.3 bln people. Despite the huge number of residents, most of whom housed together in common rooms, the pandemic situation in the country was relatively safe for a long time. But in mid-April, India broke the US record for the number of deaths per day (2,023) and new cases of the disease - 296,041 people were infected with a new strain in India. Representatives of the World Health Organization suggest that the new strain is more dangerous. It is transmitted more easily than those already known and causes more serious consequences. People who have been ill earlier, have antibodies in their blood, as well as those who have been vaccinated with vaccines that exist today, are not protected against the Indian strain. According to the infectious disease specialists, the new strain of coronavirus is dangerous not only for middle-aged and elderly people. There are a lot of young people among the victims of the virus in India, although previously people of this age group showed no symptoms in most cases.

"[Brent's] renewed failure to exceed $70 is likely to have sparked selling by speculative market participants, especially as operation of the Colonial Pipeline is being ramped up again in the U.S.," Commerzbank said.

U.S. President Joe Biden reassured motorists that fuel supplies should start returning to normal this weekend, even as more filling stations ran out of gasoline across the Southeast nearly a week after a cyberattack forced a shutdown at the nation's main fuel pipeline. Colonial Pipeline said late on Thursday that it had restarted its entire pipeline system and had begun deliveries in all of its markets. The U.S. capital was running out of gasoline on Friday despite the pipeline restart. Gas station outages in Washington, D.C., climbed to 87%, from 79% the day before, tracking firm GasBuddy said.

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