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Oil Down on Global Covid, ‘NOPEC’ Threat & Stocks Selloff

CommoditiesApr 20, 2021 04:11PM ET
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© Reuters.

By Barani Krishnan

Investing.com - Oil prices fell more than 1% on Tuesday on fears about a Covid resurgence in major oil consumers India and Japan, a stock market selloff and U.S. legislative attempts to try and curb production-price fixing by OPEC.

“There’s a whole bunch of stuff going on, and none of it is too good for oil,” said John Kilduff, founding partner at New York energy hedge fund Again Capital. 

New York-traded West Texas Intermediate, the benchmark for U.S. crude, settled down 76 cents, or 1.2%, at $62.67 per barrel. It fell to a session low of $61.54 earlier.

London-traded Brent, the global benchmark for crude, settled down 48 cents, or 0.7%, at $66.57. Brent fell to as low as $65.54 earlier in the day.

The number of confirmed cases of the coronavirus-borne illness COVID-19 climbed above 142 million on Tuesday, with India occupying the second slot after the United States with more than 15 million cases. 

India, the third largest crude consumer after China and the United States, recorded more than 250,000 new infections and over 1,700 deaths in the past 24 hours alone, casting serious concerns about the mobility of its 1.4 billion people and their demand for energy as cities in the country fell like ten pins into lockdowns.

Japan, the world’s fifth-largest energy consumer, tightened its rules on coronavirus test certificates needed to be submitted by all passengers upon arrival at Japanese airports, with those failing to meet required conditions to be denied entry into the country in principle. 

The Japanese and Indian governments have decided to postpone their foreign and defense ministerial talks scheduled this weekend in Tokyo due to the Covid situations.

A selloff across equity markets exacerbated the sour mood of investors, with U.S. tech stocks falling its most in two days since a month ago.

If those weren’t enough, a U.S. legislative assembly panel reportedly passed a bill to open the OPEC oil production group and countries that work with it to lawsuits for collusion in boosting petroleum prices. 

The so-called NOPEC bill, introduced by Representative Steve Chabot, a Republican, passed on a voice vote in the House Judiciary Committee. Similar bills to crack down on the Organization of the Petroleum Exporting Countries when oil prices are on the rise have appeared in Congress without success for more than 20 years. It was uncertain, however, if the legislation would be considered by the full U.S. House of Representatives chamber.

Separately, the oil trade will be looking out later in the day for an idea of what last week’s crude and petroleum stockpiles might have been from an inventory snapshot due from the API, or American Petroleum Institute.

The API snapshot, scheduled for release at 4:30 PM ET (20:30 GMT), will come before Wednesday’s official report from the U.S. Energy Information Administration on supply-demand of petroleum products for the week ended April 16.

According to a consensus of analysts tracked by Investing.com, U.S. crude crude stockpiles likely fell by 2.9 million barrels last week, versus the drop of 3.5 million barrels noted in the previous week to April 9.

Gasoline inventories likely rose by 650,000 barrels versus the rise of 309,000 in the prior week, consensus shows.

And stockpiles of distillates, made up of diesel and heating oil, likely declined by 898,000 barrels last week after dropping 2.08 million barrels a week earlier.

Oil Down on Global Covid, ‘NOPEC’ Threat & Stocks Selloff
 

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Comments (6)
Ernest Wong CA
Ernest Wong CA Apr 20, 2021 5:26PM ET
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TP last night when Brent hit both $67.99 and $67.49; then went long $66 and $66.5. Almost longed successfully $65.50 but it bottomed out at $66.51 LMAO!
Ernest Wong CA
Ernest Wong CA Apr 20, 2021 5:26PM ET
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typo - not $66.51, it's $65.51 LMAO
Gene Kret
Gene Kret Apr 20, 2021 5:25PM ET
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Its all BS. Just buy low and sell high UCO!
Joe Zhang
Joe Zhang Apr 20, 2021 1:35PM ET
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here we go again
Jeff Page
Jeff Page Apr 20, 2021 1:03PM ET
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India the third largest user behind China and the United States
Barani Krishnan
Barani Krishnan Apr 20, 2021 1:03PM ET
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As the story states.
Connor Murphy
Connor Murphy Apr 20, 2021 12:33PM ET
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“India, the third largest crude consumer after China and India”Do you guys have an editor?
Show previous replies (13)
Barani Krishnan
Barani Krishnan Apr 20, 2021 12:33PM ET
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SunilKumar Dixit  I could not have put it better. There are some who wonder why I've said so much over so little. They do not know the history of these trolls :) Thanks and bests to you.
Ernest Wong CA
Ernest Wong CA Apr 20, 2021 12:33PM ET
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Barani Krishnan  that does not really bother me. no worries :)
Barani Krishnan
Barani Krishnan Apr 20, 2021 12:33PM ET
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Ernest Wong CA  Ha ha welcome to the thread. API had a build; interesting to see what EIA will say tomorrow.
Ernest Wong CA
Ernest Wong CA Apr 20, 2021 12:33PM ET
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Barani Krishnan  thanks man. Actually I don't really care about what they said about the stockpile data as it's a week old. I don't really understand why the market is so concerning about the historic figure. Anyway as a trader I trade on market sentiments. Profit is the thing, nothing else :P
Barani Krishnan
Barani Krishnan Apr 20, 2021 12:33PM ET
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Ernest Wong CA  True, but there's so much currency put on the EIA's weeklies that the market just goes along, I guess :)
Maher Maher
Maher Maher Apr 20, 2021 12:33PM ET
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Patti R Callanhan
Patti R Callanhan Apr 20, 2021 12:33PM ET
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