Oil costs have fallen greater than 1 % on fears that surging COVID-19 cases in India will dent gas demand on the planet’s third-greatest oil importer and as buyers ready for a deliberate enhance in crude output from the world’s prime producers in May.
Brent crude fell 72 cents, or 1.1 %, to $65.39 a barrel by 06:53 GMT on Monday, following a 1.1-% rise on Friday. US West Texas Intermediate (WTI) crude futures have been down 67 cents, or 1.1 %, at $61.47 a barrel, after rising 1.2 % on Friday.
Both benchmark crudes fell about 1 % final week.
“Market sentiment was dented on worries that surging number of COVID-19 cases in some countries, especially in India, will slash fuel demand,” Kazuhiko Saito, chief analyst at commodities dealer Fujitomi Co.
India’s new coronavirus infections hit a document peak for a fifth day on Monday as international locations together with the United Kingdom, Germany and the United States pledged to ship pressing medical assist to assist battle the disaster overwhelming its hospitals.
An estimate from consultancy FGE is for gasoline demand in India to slide by 100,000 barrels per day (bpd) in April and by greater than 170,000 bpd in May. India’s whole gasoline gross sales got here to just about 747,000 bpd in March.
Diesel demand, which at about 1.75 million bpd accounts for about 40 % of refined gas gross sales in India, might droop by 220,000 bpd in April and by one other 400,000 bpd in May, FGE says.
Signs of pressure on India’s refiners are beginning to emerge. Mangalore Refinery & Petrochemicals Ltd has minimize processing charges, whereas Indian Oil Corp has up to now did not challenge an anticipated tender to buy West African crude.
A shift from oil to grain
In Japan, the world’s fourth-largest oil purchaser, a 3rd state of emergency in Tokyo, Osaka and two different prefectures started on Sunday, affecting practically 1 / 4 of the inhabitants as the nation makes an attempt to fight a surge in cases.
“Investors, including speculators, have been shifting funds from oil markets to grain markets recently as volatility has been much higher in prices of corn and other grains,” Fujitomi’s Saito mentioned.
Chicago corn, wheat and soybeans hit multi-12 months highs final week amid considerations over chilly climate harm to crops throughout the US grain belt, together with expectations for extra use of agricultural merchandise for biofuels.
Oil’s strong begin to the 12 months faltered in mid-March as some areas began to see a virus resurgence, though costs are nonetheless up virtually 30 % in 2021.
The Organization of the Petroleum Exporting Countries and allies led by Russia, recognized as OPEC+, stunned the market at its April 1 assembly by agreeing to ease manufacturing curbs by 350,000 barrels per day (bpd) in May, one other 350,000 bpd in June and an extra 400,000 bpd or so in July.
“There were technical adjustments as the oil markets’ rally has been overdone and as the OPEC+ is set to add supply from May,” mentioned Naohiro Niimura, a associate at Market Risk Advisory, including Brent might head all the way down to roughly $60 a barrel.
The producer group will maintain a largely technical assembly this week, with main adjustments to coverage unlikely, Russian Deputy Prime Minister and OPEC+ sources mentioned final week. A technical committee assembly is ready for Monday.
