Oil surges, but gains are capped by demand concerns as India shifts away from COVID-19

TOKYO (Reuters) – Oil prices rebounded early Tuesday after declines in the previous session, but gains were likely capped by growing concern over fuel demand in India, the world’s third largest importer of crude now criticized by the spiral of new coronavirus cases.

Brent rose 26 cents, or 0.4%, to $ 65.91 a barrel at 0141 GMT, after falling 0.7% on Monday. US oil gained 23 cents, or 0.4%, to $ 62.14, after declining the same amount in the previous session.

“There are clearly concerns around the outlook for demand, particularly over how the Covid-19 situation is developing in India,” ING Economics analysts said in a note.

The Indian government has ordered the country’s military to help respond to the surge in coronavirus infections, with countries like Britain, Germany and the United States pledging aid as the emergency overwhelms them hospitals.

India’s woes come as the Organization of the Petroleum Exporting Countries (OPEC) and its Russia-led allies, a group known as OPEC +, stand ready to discuss production policy during the ‘a meeting this week.

The OPEC + Joint Technical Committee has maintained a growth forecast in oil demand growth this year, but is concerned about the surge in COVID-19 cases in India and elsewhere, three sources from the group told Reuters. producers.

“The big question is whether OPEC + considers the situation bad enough to change its planned production easing from May 1,” ING said. “We still expect the group not to announce any changes to their plan at their meeting tomorrow.”

(Reporting by Aaron Sheldrick; Editing by Kenneth Maxwell)