Oil prices fell 1% today as India's coronavirus crisis deepened, halting a rally that had lifted crude to an eight-week high after the IEA and OPEC forecast a rebound in global demand.
Brent crude was down 74 cents, or 1.1%, at $68.58 a barrel this morning, after rising 1% yesterday.
West Texas Intermediate (WTI) was down 75 cents, or 1.1%, to $65.33 a barrel, having risen 1.2% in the previous session.
"The path for crude prices appears to be higher but until the situation improves in India, WTI will probably struggle to break above the early March high," Edward Moya, senior market analyst at OANDA, said in a note.
Oil demand was already outstripping supply and the shortfall was expected to grow even if Iran boosted exports, the International Energy Agency (IEA) said yesterday.
A day earlier, the Organization of the Petroleum Exporting Countries (OPEC) stuck to its forecast for a strong return of world oil demand in 2021, with growth in China and the US countering the impact of India's coronavirus crisis.
But global concern is rising about the situation in India, the world's third-biggest importer of crude where a variant of the coronavirus has swept through the countryside.
Medical professionals have not been able to say when new infections will plateau and other countries are alarmed over the transmissibility of the variant that is now spreading worldwide.
Meanwhile, fuel shortages worsened in in the southeastern US, six days after the shutdown of the Colonial Pipeline, the largest US fuel pipeline network.
Colonial, which pumps more than 2.5 million barrels per day of fuel, said it hoped to get a large portion of the network operating by the end of the week.
"While the disruption is meaningful for local retail markets, its impact is still likely to be transient as there is no physical damage to the pipeline," Goldman Sachs analysts said.