Oil slump deepens as Europe faces pandemic lockdowns

Source: Reuters

Source: Reuters

Oil prices fell on Friday, extending losses for a sixth day as a new wave of COVID-19 infections wash across Europe, spurring new lockdowns and dampening hopes for a recovery in demand for fuels anytime soon.

Prices plunged the most on Thursday since last summer, leaving oil down nearly 10 percent this week with the reality that the pandemic is abiding, even if infections have plummeted in the US, the worst-hit country and biggest crude consumer.

US crude fell below $ 60 again and was trading at $ 59.97 a barrel by 0115 GMT. Brent crude was off by 1 cent at $ 63.27.

Several large European countries have reimposed lockdowns as new infections increase again, while vaccination programs slow because of concerns about side effects of the AstraZeneca vaccine, which was being widely distributed in Europe.

“Demand concerns linked to a bumpy vaccine roll-out in Europe and other parts of the world” are hitting prices, said Vivek Dhar, director, mining and energy commodities research, at Commonwealth Bank of Australia. Rising infections in Brazil were also weighing on the market, he said.

Germany, France and other countries have since announced the resumption of inoculations after regulators declared the AstraZeneca vaccine safe, but the programme halt has made it harder to overcome resistance to vaccines among some of the population.

Rising COVID-19 cases, particularly in Brazil, also weighed on the demand outlook, and a stronger US dollar pressured oil prices.

Supplies of oil are plentiful as well, with Saudi Arabia’s crude exports increasing in January for a seventh straight month to the highest since April 2020, according to the Joint Organisations Data Initiative website on Thursday.

Shipments from the world’s biggest oil exporter increased to 6.582 million barrels per day in January from 6.495 million the previous month.

In the US, crude inventories increased for a fifth week last week, according to official figures released on Wednesday.