Oil prices fell 1% on Tuesday, hit by concerns that new pandemic curbs and slow vaccine rollouts in Europe will slow a recovery in demand, while producers cut prices in a sign of plentiful supply.
U.S. West Texas Intermediate (WTI) crude futures for May delivery fell 80 cents, or 1.3%, to $60.76 a barrel by 0725 GMT. The April contract expired on Monday at $61.55, up 13 cents from Friday, after plunging more than 6% last week.
Brent crude futures for May dropped by 93 cents, or 1.4% to $63.69, erasing a gain of 9 cents in the previous session.
“Global travel is still looking like it could be a while away,” said Matt Stanley, a fuel broker at Star Fuels in Dubai, adding that a second-half recovery in oil demand looked doubtful as lockdowns remain the order of the day.
Extended lockdowns are being driven by the threat of a third wave of infections, with a new variant of the virus on the continent.
Germany, Europe’s biggest oil consumer, is extending its lockdown until April 18 and asked citizens to stay home to try to stop a third wave of the COVID-19 pandemic.
Last week, the Paris-based IEA cut its forecast for crude demand in 2021 by 2.5 million barrels per day, while the EIA forecast global oil supply would surpass demand in the year’s second half.
Physical crude markets are indicating that demand is lower, much more so than the futures market.
On Monday, Nigeria, Africa’s biggest oil producer, cut its official selling prices for April-loading cargoes, suggesting that suppliers are trying to spur sales.
Angola, the continent’s second-biggest producer and a key supplier to China, still has some April cargoes unsold, a sign of a lack of interest from Chinese refiners.
“Physical prices have been weaker than futures have been suggesting for several weeks now,” said Lachlan Shaw, National Australia Bank’s head of commodity research.
U.S. crude stockpile data from the American Petroleum Institute will be released later on Tuesday.
Analysts estimate U.S. crude inventories fell by about 900,000 barrels in the week to March 19 while refinery utilisation rose by 3.2 percentage points, a Reuters poll showed.
Inventory data from the EIA, considered more definitive, will be released on Wednesday.