Oil prices edged lower on Wednesday with a rapid spread of COVID-19 infections in India, a bigger-than-expected build in U.S. crude stocks outweighing confidence shown by OPEC and its allies of a solid recovery in global fuel demand.
OPEC+ Meeting on Oil Demand Outlook
The monitoring panel of the Organization of the Petroleum Exporting Countries and allies together called OPEC+, decided to stick to plans for a phased easing of oil production restrictions from May to July amid upbeat forecasts for a recovery in global demand and despite surging coronavirus cases in India, Brazil and Japan.
The panel decided to stick to policies broadly agreed upon at a previous April 1 meeting of OPEC+, Russian Deputy Prime Minister Alexander Novak said after the talks.
However, India’s rapid spread of COVID-19 infections has stalled oil price gains with fuel use and refinery output dropping in the country, the world’s third-largest oil consumer.
“It’s almost as if they looked at the situation in India and some concerns in Brazil and said these are risks but right now the demand story still has a way to go,” said Commonwealth Bank commodities analyst Vivek Dhar.
Additionally, U.S. crude opened higher on Wednesday, after a market monitoring panel of the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, stuck with plans to bring 2.1 million barrels per day (BPD) back to the market in three stages between May and July.
The volume includes 1 million BPD which Saudi Arabia voluntarily cut.
Currently, the market is banking on a strong recovery in the United States and China to outweigh the effect of the rising cases of COVID-19 In India.