It’s Friday and that means the Baker-Hughes Rig Count is out. This week’s figure came in at 344, up two rigs from last Friday’s numbers. Although the Baker-Hughes report isn’t a major market mover, it gives us an indication of where North American production is at. With WTI trending higher above $65.00, the increase in rigs is not surprising. However, the COVID-19 crisis in India is posing major demand-side questions.

Without a doubt, COVID-19 has been the single largest crude oil market driver of the past two decades. Now, a spike in coronavirus cases in the third-largest oil-consuming nation in the world is threatening to derail values. This statement from Price Futures Group senior energy analyst Phil Flynn sums up the COVID/crude oil situation:

“When Saudi Arabia cut their crude selling price, it was a stark reminder that there are still pockets of danger of COVID that could impact demand.” 

Western media coverage of the impact of COVID-19 in India has been spotty. However, Reuters is reporting that India posted record infections and deaths Thursday, posing major oil demand questions. The result has been a lid on WTI and Brent crude, both of which have experienced bearish pressure over the past 24-hours.

COVID-19 Fears Send WTI Below $65.00

If you’ve read any of my crude oil updates from the past 6-months, then you’re aware of my bullish bias toward WTI. Given the Biden administration’s stance on fracking and a full COVID-19 economic reopen, supplies are positioned to shrink as demand comes back online. However, the biggest caveat to my bullish energy argument is COVID-19. If we see another global shutdown, then oil prices will certainly crash.

Overview: For now, the COVID-19 situation in India is one of the few items keeping WTI and Brent from revisiting five-year highs. As we move into the peak demand summer season, oil prices are due to rise ― unless we see a collection of spring 2020-esque lockdowns.