Oil Prices Plummet On Renewed Lockdowns

Oil prices were down on Tuesday to lows not seen since February 12 as it was hit by concerns over new pandemic curbs and slow vaccine rollouts in Europe as well as a stronger dollar.

Brent crude futures were down by $2.61, or 4 percent, to $62.01 a barrel, having hit a low of $61.41. West Texas Intermediate (WTI) U.S. crude futures fell by $2.71, or 4.4 percent, to $58.85, after falling to as low as $58.47.

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Both major oil benchmarks lost more than 6 percent during the previous week but remained above the $60 mark.

Europe’s biggest oil consumer, Germany is considering extending its lockdown into April to contain a third wave of Covid-19 infections. This has resulted in reduced growth forecasts by economists.

It is also noteworthy that the front-month Brent spread flipped into a little contango (a situation whereby the futures price edges above the spot price) for the first time since January.

“Continental Europe is tightening the coronavirus measures and thereby further restricting mobility,” Commerzbank analysts said. “This is likely to have a correspondingly negative impact on oil demand.”