Oil prices fell more than 7% on Thursday, the biggest one-day drop since September, as traders weighed in on signs that demand in Europe could fall and data showing that crude oil remains plentiful.
US crude oil prices ended the day down 7.1% to $ 60 a barrel after the fifth consecutive daily decline. The slide stops what had been an almost uninterrupted growth since the beginning of the year. Even with Thursday’s collapse, oil rose nearly 25 percent in 2021. It hit a two-year high of more than $ 66 earlier this month.
Energy markets have reversed their course this week, with investors worried that the accidental launch of coronavirus vaccines in Europe and growing cases around the world could lead to caution among consumers and weaken fuel demand. Even though the European Union’s health agency said on Thursday that a vaccine produced by AstraZeneca PLC is safe, many analysts still expect the recovery in fuel demand to be bumpy.
France announced on Thursday a new blockade in the Paris region. Germany and France suspended the use of the AstraZeneca vaccine earlier this week, exacerbating concerns that the region’s economy could lag behind the rest of the world.
Some traders are also concerned that demand in Asia, which has been steady until late, could disappoint due to border closures and other restrictions.
And while massive cuts in oil supplies by major producers such as Saudi Arabia have boosted prices, Thursday’s slide showed growing recognition that demand will not be strong enough to make them much larger than the range. their current situation, traders said. Some investors in recent weeks have been considering the possibility of a “supercycle” of goods that could send fuel prices much higher and could catch consumers at the gas station.
“The rhetoric of the ‘super’ oil price cycle is finally becoming a reality check,” Louise Dickson, an oil market analyst at consulting firm Rystad Energy, said in a statement.
Brent crude oil, the overall value of oil prices, ended the day down 6.9% to $ 63.28 a barrel, equivalent to some of its recent advances.
In another sign, oil remains plentiful, US oil stocks rose in the week ending March 12 and are about 6% above the five-year average for this time of year, the Energy Information Administration said on Wednesday. Energy markets are still recovering from the recent Texas freeze, which has reduced the amount of oil taken over by refineries. Refineries take crude and turn it into other energy products.
And the International Energy Agency said in its latest monthly report this week that stocks and global oil supplies remain plentiful, easing some concerns about possible shortages and a prolonged rise in fuel prices affecting consumers at the pump.
Despite the recent drop in oil prices, many analysts expect continued reductions in production by the Organization of the Petroleum Exporting Countries and its allies to remain crude around current levels.
Write to Amrith Ramkumar at [email protected]
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It appeared in the March 19, 2021 print edition as “Crude Drops 7% on Worry Over Vaccine Woes.”