Oil gains on growing fuel demand, even as infections rise

Oil gains on growing fuel demand, even as infections rise

Apart from lower oil prices, the quantum of imports in the two month period has also fallen to 31 million tonne (MT) from 39 MT previous year.

The country's oil import spending declined to just $ 2.3 billion in May, from $ 9.5 billion in May a year ago.

Oil headed for a weekly decline - only the second since April - as a surge in U.S. coronavirus cases clouded the demand outlook, though the pessimism was tempered by huge cuts to Russia's seaborne crude exports. The average crude price in April was around $ 20 per barrel. But compared to past year May's average crude price of over $70 a barrel, the current price are still at less than the halfway mark. But it will depend on how oil producers respond to current disruptions and how long the current coronavirus crisis continues and controls the demand conditions.

Globally, India, South Korea and New Zealand have all reported higher incidences of the Covid-19 in recent weeks.

"Markets have got ahead of themselves", said PVM Oil Associates analyst Stephen Brennock. OIL has adopted the new concessional tax regime introduced for the financial year 2019-20 and effective tax rate under the new regime would be 25.17%. Already taxes on petroleum products have been jacked up to mobilise additional resources for these unplanned expenditures.

The cost of the August futures for Brent crude on the London ICE Futures exchange to 18:00 GMT on Friday is $40,59 per barrel, or $0,46 (1,12%) below the price of closing of previous session.

Lower volume of crude processing by fuel refiners is also expected to have an impact on the import bill. As the traders, the strong reduction in the planned oil exports from the European ports of Russian Federation in July compared to June will trigger a battle for each cargo and will lead to further growth of premium prices for Urals to Brent. However, in May past year, crude prices were slightly above $ 70 per barrel.

State-run Oil India (OIL) has posted an nearly twofold increase in its pre-tax profit in the fourth quarter of FY20 at Rs 267.57 crore, aided by reversal of deferred tax.

The United States reported more than 41,000 new cases on Thursday, the second consecutive day with a record total, with health officials saying the true national caseload was probably 10 times the official count.

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