By Adedapo Adesanya
The international benchmark crude oil, Brent crude, dropped almost 6 per cent, precisely 5.93 per cent on Tuesday to trade at $60.79 per barrel as surging COVID-19 cases in Europe continue to depress the market.
The United States crude benchmark, the West Texas Intermediate (WTI), was also not spared yesterday as it went down by 5.5 per cent to sell at $57.58 per barrel.
How prices fell
Prices tanked on concerns about Europe’s third wave of COVID infections, new lockdowns and slow vaccine rollout.
Germany extended its lockdown until April 18, and Chancellor Angela Merkel urged citizens to stay at home for five days over the Easter holidays.
This is detrimental to Europe’s demand recovery is with its largest economy alongside France and Italy all having widened lockdown measures this month.
This is coupled with slow vaccination programs in many countries in the region, which means they are lagging behind the United States and the United Kingdom.
Many countries have resumed the use of AstraZeneca’s COVID-19 vaccine after the European Medicines Agency (EMA) and the World Health Organization (WHO) said the benefits outweighed the risks, following investigations into reports of blood clots.
More than 15 countries on the continent had suspended or delayed use of the vaccine after reports of people being admitted to hospitals with clotting issues and bleeding after being inoculated, yet this doesn’t stop the fact that its pause drew back the timeline.
Meanwhile, coronavirus cases are also surging in India, one of the world’s largest importer of oil and threatening the economy’s recovery from recession.
Prices were also affected after the American Petroleum Institute (API) reported a build in crude oil inventories of 2.927 million barrels for the week ending March 19.
Analysts had predicted a much smaller inventory build of 272,000 barrels for the week. Larger crude inventories tend to weaken prices.
In the previous week, the API reported a draw in oil inventories of 1 million barrels after analysts had predicted a build of 2.964 million barrels
If confirmed by US government data from the Energy Information Administration (EIA) on Wednesday, that would be the fifth straight weekly gain in inventories.
In addition, a stronger US Dollar further depressed oil prices while investors moved to safer asset classes shunning a riskier one like crude. A rise in the greenback makes the commodity more expensive for holders of other currencies.
Dipo Olowookere