Oil prices drop on soaring coronavirus cases in India

Gulf Today Report 

Oil prices dropped on Monday due to concerns of surging COVID-19 cases in India likely to drag down fuel demand and investors gearing up for the scheduled increase in OPEC+ oil output from May.

Brent crude futures dropped 38 cents, or 0.6%, to $65.73 a barrel by 05:07 GMT while US West Texas Intermediate (WTI) crude futures were down 31 cents, or 0.5%, at $61.83 a barrel.

As the world’s third-largest oil importer set a new global record for the most COVID-19 infections in a day, Prime Minister Narendra Modi urged all citizens to be vaccinated and exercise caution.

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According to Fujitomi's Saito, "investors, including speculators, have been shifting funds from Oil markets to grain markets recently as volatility has been much higher in prices of corn and other grains."

As OPEC+ sets to increase supply from May, "Brent could head down to around $60 a barrel going forward as a recovery in demand will likely be limited without active travel restrictions worldwide," Naohiro Niimura, a partner at Market Risk Advisory said.

The Organization of the Petroleum Exporting Countries and allies led by Russia, known as OPEC+, surprised the market at its April 1 meeting by agreeing to ease production curbs by 350,000 barrels per day (bpd) in May, another 350,000 bpd in June and a further 400,000 bpd or so in July.