Oil prices fall as India’s COVID-19 crisis dents demand outlook

Oil prices fell sharply on Monday amid concerns that surging COVID-19 cases in India and Japan, the world’s third and fourth biggest crude oil importers respectively, will dent fuel demand.

Investors also braced for a planned increase in OPEC’s output from May.

Benchmarks of Brent crude fell as much as 1.7 per cent to 64.34 dollars a barrel, after rising 1.1 per cent on Friday.

U.S. West Texas Intermediate (WTI) crude futures were also down 1.7 per cent at 61.10 dollars, after climbing 1.2 per cent in the previous session.

Both benchmark contracts fell about 1 percent earlier.

India reported a record number of COVID-19 cases for the fifth straight day on Monday and the official death toll also jumped, plunging the country into a humanitarian crisis.

Rising virus cases in India and restrictions to limit the spread will slash fuel demand, analysts say.

Meanwhile, countries including Britain, Germany and the United States have pledged to send urgent medical aid to help battle the crisis overwhelming India’s hospitals.

Consultancy FGE expects gasoline demand in India to slip by 100,000 barrels per day (bpd) in April and by more than 170,000 bpd in May.

India’s total gasoline sales came to nearly 747,000 bpd in March.

Diesel demand is expected to slump by 220,000 bpd in April and by another 400,000 bpd in May.

A third state of emergency for Tokyo and three western prefectures began in Japan on Sunday, affecting nearly a quarter of the population.