Oil Down Over COVID-19 Lockdown, Fuel Demand Worries By

© Reuters.

By Gina Lee – Oil was down Thursday morning in Asia, skidding near 2%. Fresh COVID-19-induced lockdowns in Europe re-triggered fuel demand worries, capping overnight gains from the grounding of a container vessel blocking oil shipments through the Suez Canal.

fell 1.37% to $63.53 by 12:18 AM ET (4:18 AM GMT) and slid 1.67% to $60.16. Both Brent and WTI futures traded above the $60 mark, however.

The black liquid took a tumble earlier in the week as a third wave of European COVID-19 cases and vaccine rollout delays impacted fuel demand. Prices reversed course sharply on Wednesday as the Ever Given got stuck in the Suez Canal, blocking the waterway for 10 tankers carrying 13 million barrels of oil. Efforts by tugs and diggers to have so far been unsuccessful.

Data from the U.S. released on Wednesday by the U.S. Energy Information Administration (EIA) showed that gasoline demand improved, and refinery run rates were picking up, giving markets a boost.

showed a build of 1.912 million barrels in the week to Mar. 19. Forecasts prepared by predicted a 272,000-million-barrel draw, while a 2.396-million-barrel build was reported in the previous week.

released the day before showed a build of 2.927 million barrels.

However, the blockage of the world’s most important waterway and the U.S. supply data was overshadowed by rising COVID-19 and fuel demand worries.

“As much as those [Suez Canal blockage and U.S. demand] factors were there, it doesn’t really erase the demand concerns questions that were asked earlier this week,” said Commonwealth Bank commodities analyst Vivek Dhar.

“And while the focus was on Europe, we also have rising COVID-19 cases in places like India and Brazil, developing economies which are really critical to the story for sustainable oil demand growth,” he added.

India recorded its highest one-day tally of new infections and deaths on Wednesday, adding that a new ‘double mutant’ COVID-19 variant had been discovered.

As fuel demand worries persist and prices fall, there are growing expectations that the Organization of the Petroleum Exporting Countries and allies, or OPEC+, will extend current supply curbs into May when the cartel convenes on Apr. 1.

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