0303 GMT: Crude oil futures were slightly higher during mid-morning Asian trade May 17, but any upside was limited by concerns over renewed coronavirus-related mobility restrictions in the region.
At 11:03 am Singapore time (0303 GMT), the ICE Brent July contract was up 34 cents/b (0.49%) from the May 14 settle at $69.05/b, while the June NYMEX light sweet crude contract was up 31 cents/b (0.47%) at $65.68/b.
The market continues to monitor the progress of the COVID-19 pandemic in Asia, where a growing list of countries have tightened mobility restrictions.
Singapore and Taiwan, two countries that have thus far been lauded for reigning in the virus, are among the countries grappling with the rising number of infections. Singapore, on May 14, had introduced new restrictions under what it termed as 'Phase 2 (Heightened Alert)' to stem the recent rise in infections, whereas Taiwan, on May 15, followed suit, raising its coronavirus alert level in the capital, Taipei, and the surrounding city, and imposing two weeks of restrictions.
Meanwhile, over in India, Delhi extended its lockdown until May 24, Chief Minister Arvind Kejriwal said on May 16. Other parts of India, including states such as Maharashtra and West Bengal, have also extended their mobility restrictions, resulting in large swathes of the country currently under some form of lockdown.
"A new wave of COVID-19 restrictions in Asia could see the recovery in demand [showcased by improving inventory data] hit a wall," ANZ analysts said in a May 17 note.
Out in the west, fears over the spread of the B.1.167 mutant strain has also dampened market sentiment, even as the UK prepares to take a major step out of its lockdown on May 17. Health Secretary Matt Hancock said that the variant is more transmissible and could soon become the dominant strain in the region, with Prime Minister Boris Johnson also expressing concern over the strain, saying it could thwart the UK's plan to fully unravel all restrictions by June 21.
Market analysts have cautioned that the prospect of a deterioration in the pandemic situation poses significant downside risk for oil prices, but have added that the market remains supported for now by the increase in demand from the US and Europe. They expect the front month Brent marker to trade noisily around the $69/b level.
