Global crude oil prices dropped approximately 1% on Monday as renewed European lockdowns may raise concerns over recovery in demand for fuel products, according to Reuters.
Brent crude was down 69 cents (1.1%) at $63.84 a barrel by 07:55 GMT. U.S. oil was off by $1.03 (1.7%) at $60.39 a barrel. Both contracts fell by more than 6% last week.
“Germany’s lockdown extension and the partial lockdown in France continues to weigh on EU consumption sentiment,” said Jeffrey Halley, senior market analyst at OANDA.
Germany plans to extend a lockdown to contain COVID-19 infections into a fifth month, according to a draft proposal, after new cases exceeded levels authorities say will cause hospitals to be overstretched.
Confidence in the safety of AstraZeneca’s COVID-19 vaccine has taken a big hit in Spain, Germany, France and Italy as reports of rare blood clots have been linked to it and many countries briefly stopped using it, poll data showed on Monday.
“The reality is that we’re still a long way from a full demand recovery, and it’s the record levels of withdrawn production capacity that’s the main prop for the oil market,” said Stephen Innes, chief global market strategist at Axi
The Organization of the Petroleum Exporting Countries (OPEC) and its allies have put in place unprecedented production cuts in a pact to balance global markets after demand plunged during the COVID-19 pandemic.
U.S. drillers are starting to take advantage of an earlier spike in prices on optimism about returning demand, adding the most rigs for extracting oil since January in the week through Friday.
The oil and gas drilling rig tally, an early indicator of future production, rose by nine to 411 last week, the highest since April, energy services firm Baker Hughes Co said in its closely followed report on Friday.
The rig count has been rising over the past seven months and is up nearly 70% from a record low of 244 in August.