The second wave of coronavirus outbreak in India struck the expected strong recovery in consumption in developed countries and China in the second half of the year, disrupting the recovery in oil demand. Oil prices fell on Monday.
Brent crude futures for July fell 48 cents, or 0.7%, to $ 66.28 a barrel as of GMT 0620, while West Texas Intermediate (WTI) fell 47 cents for June to $ 63.11 a barrel.
India’s total COVID-19 cases are approaching 20 million. The data show that state-level restrictions aimed at preventing infections in India led to a drop in fuel sales in the world’s third-largest consumer in April. Analysts expect a sharper drop in the country’s demand for transport fuels in May due to further restrictions, as COVID-19 in India appears to have reached its peak.
Overall fuel demand decreased by about 7% from the April 2019 pre-COVID level. Whereas, India’s demand had been said to be close to pre-COVID levels in March.
However, globally, the spread of vaccination campaigns is expected to boost global oil demand, especially during the peak travel season in the third quarter. This encourages analysts to increase their forecast for Brent prices during the fifth month.
Brent is predicted to average $ 64.17 per barrel in 2021. That’s higher than the consensus $ 63.12 last month and the $ 62.30 average for benchmark so far this year.
On the supply side, the Organization of Petroleum Exporting Countries pumped 25.17 million barrels of crude oil per day in April, an increase of 100,000 barrels compared to March, as Iran and other producers increased their production. OPEC’s production has increased every month since June 2020, with the exception of February.
Iran and the US are negotiating to revive a nuclear deal that could lead to the lifting of US sanctions that would allow Iran to increase its oil exports.
According to data, energy firms in the United States increased the number of oil and gas drilling rigs over the past week and the ninth month. This shows that the recovery in prices is pulling the drillers back to the wells.
However, U.S. crude oil production fell by one million barrels a day in February to the lowest levels since October 2017, according to a monthly official report released on Friday.
