News: Oil drops as COVID-19 vaccine halt threatens demand.
NEW YORK (Reuters) – Oil prices fell for a third day on Tuesday as Germany, France and other European nations stopped using a major coronavirus vaccine and threatened the rebound in fuel demand.
Brent crude fell 49 cents to $ 68.39 a barrel while U.S. crude fell 59 cents to $ 64.80 a barrel.
Earlier this month, Brent hit its highest since early 2020, while U.S. crude hit a 2018 high.
Germany, France and Italy said they would stop using Oxford / AstraZeneca’s COVID-19 vaccine after reports of possible serious side effects, though the World Health Organization said there was no established link with the vaccine.
The European Medicines Watchdog said the benefits of the AstraZeneca vaccine outweigh the risks. Investors fear that the slow pace of vaccination in the European Union could affect economic recovery and fuel demand.
“In order for oil demand to fully recover, the global population must be vaccinated successfully and quickly,” said Björnar Tonhaugen, Head of Oil Markets at Rystad Energy. “Before the recent setback, it was positive to note that the ongoing campaigns were on the right track.”
The pandemic sparked demand for oil. Prices have rebounded to pre-global health crisis levels, but gains have been limited by slow advances in vaccine adoption in many countries.
In the United States, crude oil inventories are rising as refineries have not fully recovered from a Texas freeze in mid-February that shut down.
“The weekly US inventory reports will set the short-term direction,” PVM analysts said in a note, adding that the dollar’s strength against other currencies also weighed on oil prices.
Analysts expect another weekly surge in crude oil inventories, when the American Petroleum Institute, an industry group, reports later Tuesday. [EIA/S]
US crude oil inventories rose nearly 14 million barrels for the week ending March 5, far exceeding projections for an increase of less than 1 million barrels.
U.S. refiners are reducing their ship rentals for extended periods of time, another sign of uncertainty about when global oil demand will return to pre-pandemic levels, shipping and trade sources said.
Reporting by Stephanie Kelly in New York; additional coverage from Shadia Nasralla and Aaron Sheldrick; Arrangement by Marguerita Choy, Will Dunham, Edmund Blair and David Gregorio
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