Oil was up Tuesday morning in Asia, with a weaker U.S. dollar and expectations of another draw in U.S. crude oil supplies supporting commodities. However, rising numbers of COVID-19 cases globally capped gains for the black liquid.
The dollar, meanwhile, edged down on Tuesday morning, with an ING analyst note saying that “dollar weakness continues to offer support to the commodities complex … despite concerns over oil demand in certain regions.”
The ever-surging number of COVID-19 cases in India, the third-largest oil importer and consumer globally, also raised concerns.
On the supply side, investors await supply data from the American Petroleum Institute, due later in the day.
Also on the supply side, Libya’s National Oil Corp (NOC) declared force majeure on Monday on exports from the country’s Hariga port. NOC added that it could extend the measure to other facilities due to a budget dispute with the Central Bank of Libya.
The action could cut Libya’s oil output by 280,000 barrels per day (bpd), knocking production below 1 million bpd for the first time since October 2020, the ING note said.
Elsewhere in the Middle East, February’s Saudi Arabian crude oil exports fell to their lowest in eight months according to Monday’s data from the Joint Organizations Data Initiative.
The Organization of Petroleum Exporting Countries and allies (OPEC+) are looking for a return of supply from next month. The cartel may not have a full-scale ministerial meeting, scheduled for the following week, indicating that its current strategy could remain in place.
“If prices sustain in the current band, they wouldn’t want to make any changes to what’s been agreed for May-July… crude appears to be under-pricing the risk of a demand slowdown in India and Europe countering gains in the U.S.,” Vandana Hari, founder of Vanda (NASDAQ:VNDA) Insights in Singapore, told Bloomberg.