Oil prices fell on Monday as a fatal second wave of a coronavirus epidemic hit India cutting short the demand outlook, offsetting optimism about a strong rebound in demand in developed countries and China in the second half of the year.
Brent crude futures for July fell 15 cents, or 0.2%, to $66.61 a barrel by 0244 GMT.
U.S. West Texas Intermediate for June was at $63.48 a barrel, down 10 cents, or 0.2%.
Effect of India Demand Drop on Oil
Brent crude fell 0.4% after most active prices rose almost 6% last month. April sales of gasoline in India hit the lowest level since August, while those for diesel were the least since October, factoring in the length of the month.
“Overall fuel demand is down by about 7% from pre-COVID level of April 2019,” A.K. Singh, Head of Marketing, Refiner Bharat Petroleum Corp.
Consequently, the Confederation of Indian Industry president urged the government to curb economic activity to counter the growing health crisis.
Analysts expect India’s demand for transportation fuels to witness a sharper slump in May due to more restrictions.
Oil has rallied in 2021 on prospects for a rebound in demand as Covid-19 vaccines are rolled out, paving the way for greater economic activity, prompting analysts to increase their forecasts for Brent prices for a fifth straight month.
The survey of 49 participants forecasts that Brent would average $64.17 a barrel in 2021, up from last month’s consensus of $63.12 and the $62.30 average for the benchmark so far this year.