Oil trades higher in Asia despite coronavirus worries

Oil markets are trading higher this morning. ICE Brent is trading about $69/bbl at the time of writing. This move higher comes despite worries over the coronavirus situation in Asia. Remarkably, Taiwan and Singapore are tightening coronavirus-related restrictions in recent days. Meanwhile, Japan has also recently extended its regional states of emergency.

According to Bloomberg, preliminary data from the three largest fuel retailers in India reveal that road fuel demand over the first half of May dipped by about 20% from the previous month. In India, we witnessed a massive rise in coronavirus infections in April and May.

Additionally, the latest production data from China this morning reveals that domestic crude oil production in April equaled 16.45mt or 4.02MMbbls/d. Notably, it is slightly down from the 4.04MMbbls/d produced in the past month. Also, refiners processed 14.19MMbbls/d of crude oil, up more than 7% YoY and marginally higher MoM. Overall, Chinese crude oil inventories declined by around 308Mbbls/d over April.

Speculators lessened their net long for both ICE Brent and NYMEX WTI

It’s essential to mention that speculators reduced their net long for both ICE Brent and NYMEX WTI over the last reporting week, likely with concerns over how the coronavirus situation in India will evolve. Speculators lessened their net long in ICE Brent by 20,737 lots over the reporting week to leave them with a net long of 295,833 lots as of last Tuesday. Besides, NYMEX WTI eyed speculators cut their net long by 24,208 lots, leaving them with a net long of 360,228 lots.

Over in India, Delhi extended its lockdown until May 24. Meanwhile, other parts of the country, including  Maharashtra and West Bengal, have also extended their mobility restrictions, resulting in large swathes of the country currently under some form of lockdown.

According to ANZ analysts, a new wave of coronavirus restrictions in Asia could see the recovery in demand hit a wall.