Oil nosedives as concern over third wave of Covid-19 crushes demand

The price of crude plummeted by over 4% on Tuesday, with concerns that new coronavirus curbs and slow vaccine rollouts in Europe will hurt a recovery in demand.

Benchmark Brent Crude had dropped 4.12% to $61.96 a barrel by 13:00 GMT, while US West Texas Intermediate (WTI) was down 3.95% to $59.13.

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

Experts also say physical crude markets are indicating that demand is lower, and much more so than the futures market. "Physical prices have been weaker than futures have been suggesting for several weeks now,” Lachlan Shaw, National Australia Bank’s head of commodity research, said, as quoted by Reuters.

Extended lockdowns have been reintroduced across the continent due to the threat of a third wave of Covid-19 infections, with a new variant of the coronavirus presenting a particular risk.

Europe’s biggest oil consumer, Germany, announced on Tuesday that it is extending a nationwide lockdown until April 18, as the number of infections in the country has soared. France and Poland have also reintroduced partial lockdowns, with both nations battling a sharp rise in cases in recent weeks.

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