Oil prices dropped as India’s new COVID cases hit a record

Oil prices dropped nearly $1 on April 26 on fears that surging coronavirus infections in India will dent fuel demand in the world’s third-biggest oil importer. Furthermore, an anticipated supply boost from OPEC+ also added to the pressure.

Brent crude declined by 89 cents, which equals 1.4%, and traded at $65.22 a barrel by 0846 GMT. Furthermore, U.S. West Texas Intermediate (WTI) crude decreased by 87 cents, or 1.4%, and traded at $61.27 a barrel. Both benchmarks declined nearly 1% last week.

According to Commerzbank analyst Eugen Weinberg, the market tends to focus on bad news from India and Japan at present. These are the countries where the number of new COVID-19 infections has increased sharply. It is prompting increased mobility restrictions to be imposed.

As we know, India and Japan are the world’s third and fourth-biggest crude oil importers.

India’s new COVID-19 cases hit a record high for a fifth day on Monday. Countries like the United Kingdom, Germany, and the United States pledged to send urgent medical support to help battle the virus.

OPEC+ is expected to ease output restrictions from May

Consultancy FGE anticipates gasoline demand in India to dip by 100,000 barrels per day (BPD) in April and by over 170,000 BPD in May. India’s total gasoline sales came to approximately 747,000 BPD in March.

FGE announced that diesel demand, which at around 1.75 million BPD accounts for nearly 40% of refined fuel sales in India, may fall by 220,000 BPD in April and 400,000 BPD in May.

The Organization of the Petroleum Exporting Countries and allies will discuss output policy at a meeting this week. However, most analysts assume it will go ahead with its decision to ease output restrictions from May.

OPEC +, in a meeting at the start of April, agreed to ease production curbs by 350,000 barrels per day (BPD) in May. Meanwhile, they are likely to ease production curbs by 350,000 BPD in June and a further 400,000 BPD or so in July.