Oil prices are falling as the pandemic affects India’s fuel sales
© Reuters. FILE PHOTO: Oil storage tanks seen in Los Angeles amid the coronavirus disease (COVID-19) pandemic
By Florence Tan
SINGAPORE (Reuters) – Oil prices fell on Monday as a catastrophic second wave of a coronavirus epidemic in India broke off the recovery in oil demand there and offset optimism about a strong recovery in consumption in developed countries and China in the second half of the year.
The futures for July fell 48 cents, or 0.7%, to $ 66.28 a barrel by 0620 GMT, while the U.S. West Texas Intermediate for June was at $ 63.11 a barrel, a drop of 47 cents, or 0, 7%.
Preliminary data shows government restrictions to curb infections in India caused a drop in fuel sales at the world’s third largest consumer in April.
“Overall fuel demand is approximately 7% lower from pre-COVID levels in April 2019,” said AK Singh, director of marketing at Bharat Petroleum Corp., adding that India’s demand was close to pre-COVID in March -Level.
India’s COVID-19 cases total nearly 20 million, and analysts expect a bigger slump in the country’s demand for fuel for transportation in May due to further restrictions. [nL1N2MQ04B]
“Given that COVID-19 has still not peaked in India, we expect fuel demand to continue to decline in May,” ING analysts said in a press release.
On Sunday, a leading Indian industry association urged authorities to curtail economic activity as the country’s health system was overwhelmed by the worsening infections.
Globally, however, the introduction of vaccination campaigns is likely to boost oil demand, especially during the peak season in the third quarter, prompting analysts to raise their forecasts for Brent prices for a fifth straight month, a Reuters poll found.
The 49-respondent survey forecast that Brent would average $ 64.17 a barrel in 2021, compared to last month’s consensus of $ 63.12 and the average of $ 62.30 for the benchmark this year.
On the supply side, the Organization of Petroleum Exporting Countries pumped 25.17 million bpd in April, up 100,000 barrels from March as Iran and other producers increased production. OPEC’s production has increased every month since June 2020, with the exception of February.
Iran and the United States are in talks to revive a nuclear deal that could lead to the lifting of US sanctions that would allow Iran to boost oil exports.
Washington denied a report on Iranian state television on Sunday that the arch enemies had entered into a prisoner swap treaty in return for releasing $ 7 billion in Iranian oil revenues that were frozen by US sanctions in other countries.
In the US, energy companies added oil and rigs last week, leading to a ninth consecutive increase in the number of rigs as a rebound in prices drew some drills back to the well, according to Baker Hughes.
However, according to a monthly government report on Friday, oil production fell over a million barrels a day in February, to its lowest level since October 2017.
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