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James Hyerczyk
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WTI and Brent Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures plunged on Thursday as India’s COVID-19 crisis escalated and a key U.S. fuel pipeline resumed operations, bringing an end to the rally that had driven crude to an eight-week high after forecasts for a rebound in global demand later in the year.

At 20:27 GMT, July WTI crude oil is trading $63.76, down $2.34 or -3.54% and July Brent crude oil is at $66.97, down $2.35 or -3.39%.

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Prices also came under pressure as a broader surge in commodity prices, labor shortage and much stronger-than-expected consumer prices data this week have stoked inflation concerns that could force the U.S. Federal Reserve to raise interest rates.

Global Concern Grows as COVID-19 Variant Ravages Rural India

In another bearish signal for oil demand, a variant of the coronavirus has swept through India, the world’s third-biggest importer of crude.

India’s coronavirus death toll crossed 250,000 on Wednesday in the deadliest 24 hours since the pandemic began, as the disease rampaged through the countryside, leaving families to weep over the dead in rural hospitals or camp in wards to tend the sick.

Medical professionals have not been able to say when new infections will plateau and other countries are alarmed over the transmissibility of the variant that is now spreading worldwide.

“Concerns are growing that the untamed spread of the coronavirus in India and in Southeast Asia will dent oil demand,” PVM analysts said in a note.

“Its impact, however, is expected to be relatively brief and the second half of the year will see the healthy revival of oil demand growth.”

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Colonial Pipeline Restored

On Wednesday, Colonial Pipeline said in an evening statement that it had restored its operations days after it was forced to shut down its entire system due to a cyberattack. The company described its decision to temporarily close pipeline service as a precautionary measure.

“Some markets served by Colonial Pipeline may experience, or continue to experience, intermittent service interruptions during the start-up period. Colonial will move as much gasoline, diesel, and jet fuel as is safely possible and will continue to do so until markets return to normal,” the company added.

For a look at all of today’s economic events, check out our economic calendar.
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