Oil prices rise after sharp declines over demand fears
Rising coronavirus cases in European countries followed by mitigation measures dampen hopes of oil demand recovery
Oil prices started climbing again on Wednesday following a steep drop during the previous trading session over demand fears, as strict restrictions and lockdowns have once again been put in place following the rise in the number of pandemic cases across Europe.
International benchmark Brent crude was trading at $61.70 per barrel at 0708 GMT for a 1.49% rise after closing Tuesday at $60.79 a barrel.
American benchmark West Texas Intermediate (WTI) was at $58.45 per barrel at the same time for a 1.19% increase after it ended the previous session at $57.76 a barrel.
Oil prices recorded sharp declines during the previous trade, with Brent falling by 5.93% and WTI by 6.16% mainly due to the rise in Covid-19 cases in Europe, which is likely to hit these economies again and curtail oil demand.
However, investors who took the opportunity to benefit from low oil prices have driven up demand in support of higher prices.
Many European countries are extending or renewing lockdown measures as a third wave of the pandemic sweeps the continent, fueled by more contagious new coronavirus variants.
European countries, including France, Germany, and Italy, have announced strict new shutdowns, as France leads the number of cases above 4.3 million in the continent, while cases in Italy now total over 3.4 million, and Spain follows with over 3.2 million cases, according to data from Johns Hopkins University on Wednesday.
The US National Institute of Allergy and Infectious Diseases, who warned that the AstraZeneca vaccine could have included outdated information in its data, did not help demand concerns.
The company said the primary analysis results would be announced within 48 hours. However, several European countries have already banned the vaccine developed by the company over alleged blood clotting problems.
Late Tuesday, the American Petroleum Institute (API) announced that US crude oil inventories would rise by 2.9 million barrels per day relative to the previous market forecast of a 900,000-barrel rise.
If crude stocks increase in line with the API’s expectations, it signals that crude demand is falling in the US, the world’s largest oil consumer, to negatively affect oil prices.