Worry about waning fuel demand in India pushes oil price down

London — Oil prices fell for a second day on Wednesday, weighed down by concerns that surging Covid-19 cases in India would drive down fuel demand in the world’s third-biggest oil importer.

Brent crude futures for June declined 95 US cents, or 1.4%, to $65.62 a barrel at 9.41am GMT, heading for their biggest daily drop in over two weeks.

US West Texas Intermediate (WTI) crude futures for June fell 93c, or 1.4%, to $61.74 a barrel. The May contract expired on Tuesday down 1.5% at $62.44.

“Demand jitters were thrust back into the spotlight yesterday amid a sharp rise in global coronavirus cases. Nowhere is this more obvious than in India,” PVM analysts said.

India, also the world’s third-largest oil user, on Wednesday reported another record increase in the daily death toll from Covid-19.

Further battering the market, data from the American Petroleum Institute (API) industry group showed US crude oil and distillate stocks rose in the week ended April 16, according to two market sources.

Crude stocks rose 436,000 barrels, API reported, according to the sources. The US Energy Information Administration will release its inventory data for last week later on Wednesday. 

Raising the possibility of further oil supply, Iran and world powers have made headway in talks to save a 2015 nuclear accord, which, if successful, could see sanctions lifted and more Iranian barrels return to the market.

Still, major oil trading companies are stowing diesel and jet fuel on newly built supertankers in Asia and Africa in anticipation of Covid-19 vaccinations driving prices higher in the months ahead. 

Reuters