Oil prices fall as India’s coronavirus surge to weigh on fuel demand

Pump jacks are silhouetted against the rising sun at an oilfield in Baku, January 24, 2013. (Reuters)

SULAIMANI (ESTA) — Oil prices fell on Monday on fears that rising coronavirus cases in India will drive down fuel demand in the world’s third biggest importer and as investors adjusted positions ahead of a planned increase in OPEC+ oil output from May.

Brent crude futures dropped 38 cents to $65.46 a barrel by 0621 GMT, following a 1.1% rise on Friday. U.S. West Texas Intermediate (WTI) crude futures were down 60 cents at $61.54 per barrel, after rising 1.2% on Friday.

“Market sentiment was dented on worries that surging number of COVID-19 cases in some countries, especially in India, will slash fuel demand,” Reuters Kazuhiko Saito, Chief analyst at commodities broker Fujitomi CO, as saying.

Indian Prime Minister Narendra Modi urged all citizens to be vaccinated and exercise caution, saying on Sunday the “storm” of infections had shaken India, as the country set a new global record for the most coronavirus infections in a day.

In Japan, the world’s fourth-largest oil buyer, a third state of emergency in Tokyo, Osaka and two other prefectures began on Sunday, affecting nearly a quarter of the population as the country attempts to combat a rise 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 told Reuters.

The Organization of the Petroleum Exporting Countries and allies led by Russia, known as OPEC+, will hold a largely technical meeting this week, with major changes to policy unlikely, Russian Deputy Prime Minister and OPEC+ sources said last week.

A technical committee meeting is set for Monday, where market fundamentals and compliance with production cuts will be discussed.

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