Oil Prices Drop as India's Covid Surge Dents Demand Outlook

Oil Prices Drop as India's Covid Surge Dents Demand Outlook
Oil Prices Drop as India's Covid Surge Dents Demand Outlook

Oil prices fell for a second day on Wednesday, weighed down by concerns that surging Covid-19 cases in India will drive down fuel demand in the world's third-biggest oil importer.
Brent crude futures for June declined 29 cents, or 0.4%, to $66.28 a barrel, after dropping 48 cents on Tuesday, CNBC reported.
US West Texas Intermediate crude futures for June fell 34 cents, or 0.5%, to $62.33 a barrel. The May contract expired on Tuesday down 1.5% at $62.44.
"India is a major crude oil consumer. So rising virus cases and thereby restrictions to limit the spread will dampen the demand outlook," said Ravindra Rao, vice president for commodities at Kotak Securities.
"Global crude markets remains well supplied with OPEC and its allies scheduled to hike production in coming months. So, if the demand picture does not improve significantly, prices may correct further."
India, also the world's third-largest oil user, on Wednesday reported another record increase in the daily death toll from Covid-19, at 2,023, and another record rise in cases at more than 295,000. 
The country, where large parts are now under lockdown due to a huge second wave of the pandemic, is facing an oxygen supply crisis to treat patients.
"You've seen refiners in India scale back runs because demand has fallen with the spread of lockdowns. That's clearly weighing on the market and sentiment," said Lachlan Shaw, head of commodity research at National Australia Bank.
OPEC+ achieved a compliance level with its agreed oil production cuts of 113% in March, unchanged from levels in February, two sources from the producer group told Reuters on Wednesday.

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