Crude Oil Sheds 8% to 5-Month Low on Renewed Demand Concerns
By Adedapo Adesanya
Crude oil prices plunged more than 8 per cent on Thursday to their lowest in five months as short-term demand concerns were raised over increasing COVID-19 cases in Europe.
Also, the strengthening US dollar weakened the value of the commodity as the price of Brent crude fell by 8.18 per cent or $5.56 to $62.44 per barrel and weakened the West Texas Intermediate (WTI) by 8.37 per cent or $5.41 to $59.19 per barrel.
It was the fifth consecutive decline for the black gold as concerns grow that Europe might not return to normalcy as previously expected because the continent is experiencing a third straight week of rising COVID-19 cases.
There is also vaccination hurdles in place as a slowdown in vaccination programs in Europe and the prospect of more restrictions to control the coronavirus have hardened expectations for a recovery in fuel use.
A number of European countries have halted the use of the AstraZeneca shot because of concerns about possible side effects, though the World Health Organization (WHO) said Europe should continue to use the vaccine.
In addition, the European Union’s drug regulator concluded that the benefits from AstraZeneca’s vaccine outweigh the risks after several of Europe’s largest countries suspended the use of the shots this month because of concerns around blood clots.
The black gold was affected by a rising dollar which gained as much as 0.5 per cent on Thursday, weakening the appeal of commodities priced in the currency. A stronger dollar makes oil more expensive for holders of other currencies.
The environment was not supported by rising crude inventories in the United States. Data on Wednesday showed crude inventories have risen for four straight weeks after severe cold weather forced shutdowns at refineries in the country’s south.
Stockpiles rose by 2.4 million barrels last week, the US Energy Information Administration (EIA) said on Wednesday, a day after the American Petroleum Institute (API) estimated there had been a 1 million barrel decline.