Oil slumped 4% on renewed lockdowns in Europe, strong US Dollar

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Oil slumped 4% on renewed lockdowns in Europe, strong US Dollar

On Thursday, in a choppy trading session in global commodity market, both US and UK crude contracts fell more than 4 per cent a day after feathering as much as 6 per cent higher, as a flurry of key fundamentals including a stronger US Dollar and a re-imposition of stiffer lockdown in major European economies, suggesting further downward momentum in crude oil contracts’ prices, had sharply depreciated investors’ morale.

Apart from that, both Brent and US crude oil futures had shrugged off much of its gains in the previous session following a media topline that quoted two salvage companies as saying that it might take weeks to put a mammothlike 400-metre Taiwanese cargo ship back in the water, which had run aground on Tuesday and blocked the single-lane southern stretch of the Suez Canal.

Nevertheless, in the day’s sweeping plunge in crude oil futures was almost entirely spurred by a shocking rise in pandemic cases in Europe and Asia, while France alongside western part of India had witnessed the highest number of pandemic cases in more than five months, prodding frets of a steeper demand-crunch.

In tandem, apart from France, which had reimposed a stiffer lockdown measure in 16 regions, a large chuck of densely populated western part of India had also been mulling a wide-spread pandemic-led restriction, while Netherlands alongside other major European economies had also brewing off similar measures.

Compounding the narratives further, earlier in the day, Novavax was quoted saying in a statement that it would delay its contract with EU about supplies of pandemic vaccines due to a shortage of raw materials. Alongside this, a stronger US Dollar, which reached a near four-month peak earlier in the day, had also weighed heavily on riskier assets likes of black gold futures.

Crude oil falls as pandemic angsts jitter

Citing statistics, in context of such clattering landscape in global crude oil market, UK crude wrapped up the day 3.8 per cent lower to $61.95 a barrel, while US West Texas Intermediate crude oil futures faltered as much as 4.3 per cent to settle down at $58.56 a barrel.

Meanwhile, referring to a raft of renewed lockdown measures adopted by a number of G20 economies, an economist at Mizuho in New York, Bob Yawger said, “Germany, Italy and other areas in the eurozone are going backwards and the demand destruction is basically overwhelming.