Oil prices steadied on Wednesday, after the previous day’s slump. However, the recovery was hindered by fears of a slow recovery in demand due to the new wave of COVID-19, which has resulted in lockdowns in Europe and a build in US crude stocks.
West Texas Intermediate (WTI) crude futures climbed 0.1%, to $57.84 a barrel, having lost 6.2% and touched a low of $57.32 on Tuesday.
Both benchmarks touched their lowest levels since early February on Tuesday and have now fallen nearly 15% from their recent highs earlier this month.
The front-month spread for both Brent and WTI slipped into a bullish trend, in which front-month contracts are lower than the later months, a sign that demand for prompt crude is declining.
“However, the market sentiment remained bearish due to growing concerns about demand recovery in the wake of new pandemic curbs in Europe,” Kazuhiko Saito, Chief Analyst, Commodities Broker Fujitomi.
Worries over the pace of the recovery from the pandemic were also heightened after a US health agency said the AstraZeneca vaccine developed with Oxford University might have included outdated information in its data.
Additionally, US crude oil stocks jumped by 2.9-million barrels in the week to March 19, against analysts’ expectations for a decline of about 300,000 barrels, according to trading sources citing data from the American Petroleum industry Institute.
However, petrol stocks fell by 3.7-million barrels, compared with expectations for a build of 1.2-million barrels.
Moreover, the Human rights sanctions in China imposed by the US, Europe, and Britain prompted retaliatory sanctions from Beijing and added to market concerns.
The weakness in oil this week seems to have validated the cautious view expressed by Saudi Arabia at the last Opec meeting, and it increases the probability of yet another rollover of current production levels at next week’s meeting.