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UPDATE 3-Oil falls as India's COVID-19 surge dents demand outlook

Mon, 26th Apr 2021 06:25

* COVID-19 cases rise in India and Japan

* Market eyes easing of OPEC+ output curbs

* No major policy changes expected from OPEC+ meeting
(Updates prices, adds analyst comment, changes dateline from
Tokyo)

By Bozorgmehr Sharafedin

LONDON, April 26 (Reuters) - Oil prices fell almost $1 on
Monday on fears that surging COVID-19 cases in India will dent
fuel demand in the world's third-biggest oil importer, while an
expected supply increase from OPEC+ also added to pressure.

Brent crude was 89 cents, or 1.4%, lower at $65.22 a
barrel by 0846 GMT. U.S. West Texas Intermediate (WTI) crude
was down 87 cents, or 1.4%, at $61.27 a barrel.

Both benchmarks fell about 1% last week.

"The market is tending to focus more on the bad news from
India and Japan at present, where the number of new coronavirus
cases has risen sharply, prompting increased mobility
restrictions to be imposed," said Commerzbank analyst Eugen
Weinberg.

India and Japan are world’s third and fourth biggest crude
oil importers.

India's new coronavirus infections hit a record peak for a
fifth day on Monday as countries including Britain, Germany and
the United States pledged to send urgent medical aid to help
battle the crisis overwhelming its hospitals.

Consultancy FGE expects gasoline demand in India to slip by
100,000 barrels per day (bpd) in April and by more than 170,000
bpd in May. India's total gasoline sales came to nearly 747,000
bpd in March.

Diesel demand, which at about 1.75 million bpd accounts for
about 40% of refined fuel sales in India, may slump by 220,000
bpd in April and by another 400,000 bpd in May, FGE says.

In Japan, a third state of emergency in Tokyo, Osaka and two
other prefectures began on Sunday, affecting nearly a quarter of
the population as the country attempts to combat a surge in
cases.

The Organization of the Petroleum Exporting Countries and
allies led by Russia, known as OPEC+, will discuss output policy
at a meeting this week, but most analysts believe it will go
ahead with its decision to ease output restrictions from May.

The group in a meeting at the start of April agreed 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.

"The looming wave of fresh OPEC+ supply coupled with renewed
demand concerns has dented hopes for a meaningful summer price
pounce," said Stephen Brennock of oil broker PVM.

(Reporting by Bozorgmehr Sharafedin in London, additional
reporting by Yuka Obayashi in Tokyo; Editing by Kirsten Donovan)

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