LONDON — Oil dropped towards $66 a barrel on Monday as concern about demand in India and higher OPEC+ supply offset optimism over a strong demand rebound in countries including the United States and China.
India on Monday reported more than 300,000 new coronavirus cases for a 12th straight day. The new wave of the virus has already led to a drop in fuel sales in the world’s third-largest consumer in April.
Brent crude fell 35 cents, or 0.5%, to $66.41 a barrel by 1000 GMT. U.S. West Texas Intermediate dropped 27 cents, or 0.4%, to $63.31.
“There is no doubt that India plays a major role when we talk about oil demand,” said Avatrade analyst Naeem Aslam. “As for the rest of the world, such as China, Europe, the Middle East and the U.S., the coronavirus vaccination process continues to roll on and we see tremendous progress.”
The U.S. and China are the world’s top two oil consumers. As of Sunday morning, the United States had administered 245,591,469 vaccine doses. China had given 275.34 million doses as of Sunday.
Brent has rallied almost 30% this year, recovering from last year’s historic lows thanks to record supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+.
“The technical picture continues to suggest that oil’s price recovery remains intact,” said Jeffrey Halley, analyst at brokerage OANDA.
Higher supply limited oil’s gains, however. OPEC+ decided last week to stick to a plan to boost supply slightly from May 1 and OPEC’s production climbed in April, led by a boost from Iran, a Reuters survey found.
In another development that could allow a further boost in Iranian supply, Tehran and world powers are holding talks to revive the 2015 nuclear deal.
*Alex Lawler, Florence Tan; Editing: David Goodman