Oil prices fell more than 7% on Thursday, marking their biggest one-day drop since September as traders weighed on signs that demand in Europe could fluctuate and that data showed crude oil was still plentiful.
US crude prices fell 7.1% that day to $ 60 a barrel after their fifth consecutive daily drop. The slide stops an almost uninterrupted rise since the beginning of the year. Even with Thursday’s tumble, oil will continue to rise by almost 25% in 2021. It hit a two-year high above $ 66 earlier this month.
The energy markets turned around this week, and investors are worried that a bumpy rollout of coronavirus vaccines in Europe and increasing cases in parts of the world could cause consumer caution and weaken fuel demand. Although the European Union’s health agency said on Thursday that a vaccine produced by AstraZeneca PLC is safe, many analysts still expect recovery in fuel demand to be bumpy.
France on Thursday announced a new exclusion from the Paris region. Germany and France suspended use of the AstraZeneca vaccine earlier this week, exacerbating existing concerns that the region’s economy could lag further behind the rest of the world.
Some traders are also concerned that demand in Asia, which has been steady lately, could be disappointing due to border closures and other restrictions.
And while the huge oil production cuts by major producers such as Saudi Arabia have pushed up prices, Thursday’s slide highlighted a growing recognition that demand will not be strong enough to push them higher than their current range, traders said. . Some investors have been considering the possibility of using a commodity ‘superbike’ over the past few weeks, which could cause fuel prices to rise much higher and pinch consumers at the petrol pump.
“The ‘super’ rhetoric in the oil price is finally becoming a bit of a reality check,” Louise Dickson, an analyst at the oil market at consulting firm Rystad Energy, said in a statement.
Brent crude, the global benchmark for oil prices, fell 6.9% on the day to $ 63.28 a barrel, which also compared some of the recent advance.
In another sign, oil remains plentiful, U.S. crude stocks rose during the week ended March 12 and are about 6% above their five-year average for this time of year, the Energy Information Administration said Wednesday. Energy markets are still recovering after the recent freeze in Texas, which reduced the amount of oil consumed by refineries. Refineries consume crude oil and convert it into other energy products.
And the International Energy Agency said in its latest monthly report this week that global oil supplies and reserves remain plentiful, alleviating concerns about possible shortages and a prolonged rise in fuel prices affecting consumers at the pump.
Despite the recent drop in oil prices, many analysts expect the Organization of the Petroleum Exporting Countries and its allies to continue to reduce production to keep pace with current levels.
Write to Amrith Ramkumar by [email protected]
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On March 19, 2021, the print edition appeared as ‘Crude Drops 7% on Worry Over Vaccine Woes’.