Oil prices fell more than 7% on Thursday, recording their biggest one-day drop since September as traders weighed signs that demand in Europe could falter and data showing that crude remains plentiful.
U.S. crude prices ended the day down 7.1% at $60 a barrel following their fifth consecutive daily decline. The slide halts what had been a nearly uninterrupted rise since the start of the year. Even with Thursday’s tumble, oil is still up nearly 25% in 2021. It hit a nearly two-year high above $66 earlier this month.
Energy markets have reversed course this week, with investors worried that a bumpy rollout of coronavirus vaccines in Europe and rising cases in parts of the world could prompt caution among consumers and weaken demand for fuel. Even though the European Union’s health agency said on Thursday that a vaccine produced by AstraZeneca PLC was safe, many analysts still expect the fuel-demand recovery to be bumpy.
France on Thursday announced a new lockdown on the Paris region. Germany and France suspended the use of the AstraZeneca vaccine earlier in the week, compounding existing concerns that the region’s economy could fall further behind the rest of the world.
Some traders are also worried that demand in Asia, which has been steady of late, could disappoint due to border closures and other restrictions.
And although massive oil-supply cuts by large producers like Saudi Arabia have buoyed prices, Thursday’s slide highlighted a growing recognition that demand won’t be strong enough to drive them much higher than their current range, traders said. Some investors in recent weeks had been considering the possibility of a commodity “supercycle” that could send fuel prices much higher and pinch consumers at the gas pump.
“The oil price ‘super’ cycle rhetoric is finally getting a bit of a reality check,” Louise Dickson, oil-markets analyst at consulting firm Rystad Energy, said in a statement.
Brent crude, the global gauge of oil prices, ended the day down 6.9% at $63.28 a barrel, also paring some of its recent advance.
In another sign oil remains plentiful, U.S. crude stockpiles rose during the week ended March 12 and are about 6% above their five-year average levels for this time of year, the Energy Information Administration said Wednesday. Energy markets are still healing following the recent freeze in Texas, which lowered the amount of oil taken in by refineries. Refineries take in crude and turn it into other energy products.
And the International Energy Agency said in its latest monthly report this week that global oil inventories and supply remain plentiful, easing some concerns about possible shortages and a prolonged climb in fuel prices that hits consumers at the pump.
Despite the recent oil-price fall, many analysts expect continuing production cuts by the Organization of the Petroleum Exporting Countries and its allies to keep crude around its current levels.
Write to Amrith Ramkumar at amrith.ramkumar@wsj.com
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Appeared in the March 19, 2021, print edition as 'Crude Drops 7% on Worry Over Vaccine Woes.'
The Link LonkMarch 19, 2021 at 05:05AM
https://www.wsj.com/articles/oil-prices-fall-on-fresh-fears-of-dwindling-demand-11616096649
Oil Prices Fall on Fresh Fears of Dwindling Demand - The Wall Street Journal
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