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Oil Prices Drop Further as Third Wave of COVID-19 Hit Demand.

Oil prices fell 1% on Tuesday amidst concerns that curb the spread of the coronavirus pandemic and slow vaccine rollouts in Europe will slow recovery in fuel demand and as producers cut prices, indicating abundant oil supply.

U.S. West Texas Intermediate (WTI) crude futures for May delivery fell 62 cents, or 1%, to $60.94 a barrel at 0149 GMT. The April contract expired on Monday $61.55, up 13 cents from Friday, after plunging more than 6% last week.

Brent crude futures for May dropped by 68 cents, or 1.1%, to $63.94, erasing a 9 cent gain in the previous session.

oil prices 23-03-2021

Germany is expected to extend restrictions on shopping and travel into April to contain the third wave of the coronavirus pandemic which has led the analyst to lower their growth prospects for oil demand.

“This is heightening fears that the pessimistic forecasts from both the International Energy Agency (IEA) and the Energy Information Administration recently could eventuate,” ANZ Research.

Last week, the Paris-based IEA  cut its forecast for crude demand in 2021 by 2.5 million barrels per day, while the EIA forecast global oil supply would surpass demand in the second half of 2021.

On Monday, Nigeria cut its official selling prices for April-loading cargoes, so as not to exceed the oil demand.

Additionally, Angola, the continent’s second-biggest producer and a key supplier to China, still has some April cargoes that remain unsold, indicating a lack of interest from Chinese refiners.

U.S. crude stockpile data from the American Petroleum Institute will be released later on Tuesday. Analysts estimate U.S. crude inventories fell by about 900,000 barrels in the week to March 19, while refinery utilisation rose by 3.2 percentage points, according to a Reuters poll.

However, Inventory data from the EIA will be released on Wednesday.

Read also: Oil Extends Losses as European’s Lockdown Slows Expected Recovery on Demand.