India, the world’s third-largest oil consumer, has experienced a record number of new COVID cases and deaths recently.
Oil prices have fallen for a second day amid concerns that high COVID-19 outbreaks in India will reduce fuel demand as the world’s third-largest oil importer.
Brent crude futures for June fell 52 cents, or 0.8 percent, to $ 66.05 a barrel at 01:57 GMT on Wednesday, after dropping 48 cents on Tuesday.
The U.S. West Texas Intermediate (WTI) crude futures for June fell 56 cents, or 0.9 percent, to $ 62.11 a barrel. May’s contract ended Tuesday down 1.5 percent at $ 62.44.
“You’ve seen refiners there (in India) running back at scale because demand has decreased with the spread of locks. That obviously weighs on the market and the sentiment, ”said Lachlan Shaw, head of commodity research at the Australian National Bank.
India, also the third-largest oil consumer in the world, on Tuesday reported its worst daily death toll from COVID-19 and is facing an oxygen supply crisis to treat patients. Large parts of the country are now locked up due to a massive second wave of the coronavirus pandemic.
Raw stock piles rising
Weighing the market further, data from the American Petroleum Institute’s (API) industry group showed that U.S. crude oil and distillation stocks rose in the week ending April 16, according to two market sources, compared with analysts’ forecasts for decline in raw and distilling inventories.
Raw stocks rose 436,000 barrels, API reported, according to the sources. Analysts surveyed by Reuters news agency had expected to pull 3 million barrels in crude stocks.
Distilled stocks, which include diesel, heating oil and jet fuel, rose 655,000 barrels, compared with analysts’ forecasts for a decline of 1 million barrels.
The US Energy Information Administration will release its inventory data for the last week later on Wednesday.
Analysts said despite pandemic hotspots in places like India and growing concerns in Japan, the world’s fourth-largest oil consumer, signs are still positive for recovery of fuel demand in the US, Europe and the United Kingdom.
“Driving is rising in the UK as vaccine roll-out accelerates. This is also the case in the United States, where drivers consume over 10 percent of the world’s oil, “ANZ analysts said in a note.