Oil prices rebounded on Tuesday after falling in the previous session, but gains are likely to be capped amid growing concern about fuel demand in India, the world’s third-biggest crude importer now slammed by spiralling new coronavirus cases.
U.S. oil gained 63 cents, or 1%, to $62.57, having declined by 0.4% the previous session.
Brent crude was up 40 cents, or 0.6%, at $66.12 a barrel after dropping 0.7% on Monday.
India’s woes comes as the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, a group known as OPEC+, are set to discuss policy on production at a meeting this week.
The OPEC+ joint technical committee has maintained a forecast for growth in oil demand growth this year, but has concerns about the surging COVID-19 cases in India and elsewhere, three sources from the producer group told Reuters.
“Traders are cautious ahead of the OPEC+ Ministerial meeting” this week, said Avtar Sandu, senior manager commodities at Phillip Futures in Singapore. “The OPEC technical committee acknowledged potential demand concerns about demand destruction brought about by the worsening pandemic in India.”
The Indian government ordered the country’s military to help respond to the surging coronavirus infections, with countries including Britain, Germany and the United States promising aid as the emergency overwhelms hospitals.
“The big question is whether OPEC+ feels that the situation is bad enough to alter its planned production easing from 1 May,” ING Economics analysts said in a note.
“We still expect that the group will announce no changes to its plan when they meet tomorrow.”