Oil plummets as rising COVID-19 cases in India overshadow expected surge in demand

© Reuters.

From Gina Lee

Investing.com – Oil was down in Asia on Monday morning as more COVID-19 cases in countries like India dampen hopes for fuel demand.

down 0.18% to $ 66.64 by 11:06 p.m. ET (3:06 a.m. GMT) and down 0.13% to $ 63.50.

India, the world’s third largest oil importer, continues to battle its second wave of COVID-19 cases. The daily number of COVID-19 cases passed the 400,000 mark on May 1 before the next day, according to the country’s Department of Health and Family Welfare. The record numbers prompted the Indian Industry Association to urge the authorities to curtail economic activity.

Losses have been limited, however, as fuel demand is expected to recover in the second half of 2021 in countries like China. The acceleration in COVID-19 vaccination rates is likely to increase global fuel demand, especially in the upcoming peak summer season.

“Strong demand in regions such as North America, Europe and China has brightened the overall outlook,” ANZ analysts said in a note.

On the supply front, the Organization of Petroleum Exporting Countries produced 25.17 million barrels a day in April, an increase of 100,000 barrels from March.

In the US, energy companies added oil and rigs to a ninth consecutive monthly surge in rigs last week as prices rebounded, Baker Hughes said. However, U.S. crude oil production fell more than a million barrels a day in February, to its lowest level since October 2017, according to Friday’s monthly government report.

Meanwhile, the US and Iran are discussing reviving a nuclear deal that could revive US sanctions and allow Iran to boost its oil exports.

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