US Oil Prices Fall Below $58 As European Lockdowns Hit Demand

WTI Crude is down more than $10 a barrel from its early March peak as lockdowns in Germany underscore demand weakness in Europe against rising US output.
Author:
Updated:
Original:

Global oil prices tumbled Tuesday, pulling U.S. crude below the $58 mark, as trades reacted to fresh lockdown orders in Europe that could delay the return of energy demand over the second half of the year.

Germany's Chancellor, Angel Merkel, ordered the new lockdowns amid a renewed spike in new infections in Europe's largest economy and the European Union's sluggish vaccine rollout. Germany will undergo a hard five-day lockdown over the Easter break, she told the nation late Monday, and won't emerge from its broader business and travel restrictions until at least April 18.

The move follows last week's decision by France's President, Emmanuel Macron, to issue new business and travel restrictions for the great Paris region, adding to previous orders that now have some 21 million citizens under restrictive measures for at least the remainder of the month.

U.S. drillers, meanwhile, are returning to full capacity following the February winter storms that knocked out installations in Texas and the Southwest, with data from Baker Hughes on Friday indicating a 9 new rigs came online last week, taking the overall total to 318.

With more crude pumping from the United States, and the U.S. dollar continuing to rise against its global peers as investors seek safe-haven assets amid the global pandemic uncertainty, price could continue to decline in the coming days and into the next monthly OPEC meeting on April 1 in Vienna.

WTI crude futures for May delivery, the benchmark for U.S. oil and gas prices, were marked $3.88 cents lower on the session at $57.68 per barrel, paring gains from as high as $68.00 per barrel earlier this month following Yemeni attacks on a key refinery in Saudi Arabia.

Brent crude contracts for May delivery, which are more tightly-aligned to global prices, tumbled $3.75 per barrel to $60.85 in mid-afternoon trading in New York, also down more than $10 from the January 2020 high of $71.38 it hit on March 8.

Exxon Mobil  (XOM) - Get Report shares, meanwhile, were marked 0.1% lower at $55.86 each. It's larger rival, Chevron  (CVX) - Get Report, edged 0.7% higher to $103.26 each.