Oil prices dropped nearly $1 on Monday. This is due to concerns that rising coronavirus cases in India will sink fuel demand in the world’s third-biggest oil importer. At the same time, an anticipated supply development from OPEC+ is also attached to the pressure.
Brent crude held 89 cents, or 1.4%, beneath $65.22 a barrel by 0846 GMT. U.S. West Texas Intermediate (WTI) crude was below 87 cents, or 1.4%, at $61.27 a barrel.
Both benchmarks dropped around 1% last week.
Commerzbank (DE: CBKG) analyst Eugen Weinberg stated that the market tends to concentrate more on the regretful news from India and Japan at present, where the number of new COVID-19 cases has risen sharply, urging increased mobility restrictions to be required.
India and Japan are the world’s third and fourth-largest crude oil importers.
India’s new COVID-19 infections caught a record peak for a fifth day on Monday. Countries such as Britain, Germany, and the United States vowed to address urgent medical aid to help battle the crisis flooding its hospitals.
Consultancy FGE supposes gasoline demand in India to slip by 100,000 barrels per day (BPD) in April and more further than 170,000 BPD in May.
India’s entire gasoline sales came to approximately 747,000 BPD in March.
Diesel demand, which at around 1.75 million BPD estimates for nearly 40% of refined fuel sales in India, may fall by 220,000 BPD in April and by another 400,000 BPD in May, FGE says.
In Japan, the third state of emergency in Tokyo, Osaka, and two other prefectures started on Sunday, hitting almost a quarter of the population. The country tries to combat a wave in cases.
The Organization of the Petroleum Exporting Countries and partners influenced by Russia, identified as OPEC+, will review output policy at a conference this week. However, most analysts consider it will go forward with its determination to raise output constraints from May.
In a conference at the beginning of April, the group admitted to easing production curbs by 350,000 barrels per day (BPD) in May, added 350,000 BPD in June, and a moreover 400,000 BPD in July.
Stephen Brennock of oil broker PVM stated that the rising wave of fresh OPEC+ supply linked with renewed demand worries had sunk hopes for a significant summer price pounce.
Oil was falling Monday morning in Asia over an expected reduction in oil demand as the number of coronavirus cases proceeds to grow in India and Japan.
Brent oil futures dropped 0.31% to $65.22 by 11:02 PM ET (3:02 AM GMT) and went over to the July 2021 contract on Apr. 25. WTI futures trimmed down 0.19% to $62.02. Both Brent and WTI futures settled over the $60 mark, however.
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