Oil drops for the fourth day on demand concern

Several European countries have halted the use of AstraZeneca (NASDAQ: AZN)’s coronavirus vaccine due to concerns over potential side effects. Germany recognizes rising COVID-19 cases, while Italy is imposing a nationwide Easter lockdown.

Brent crude dropped $1.00, or 1.5%, to $67.39 a barrel by 1310 GMT. U.S. West Texas Intermediate (WTI) crude fell 72 cents, or 1.1%, to $64.08.

The halt will not do the bloc’s economic and fuel recovery any services, stated Stephen Brennock of oil broker PVM. The concern now is that Europe can get its slow vaccine rollout back on track.

Oil also dropped after delivering the International Energy Agency’s latest reports, which stated that a supercycle was unlikely. Demand won’t return to pre-epidemic levels till 2023 and could peak earlier than beforehand thought.

IEA’s report has triggered an action amongst oil traders, stated Naeem Aslam of Avatrade. He added that they had seen some selling.

However, oil has increased from historic lows ended last year as demand deflated, partially due to record oil output cuts by OPEC and its partners. Brent went $71.38 on March 8, its highest since January 8, 2020.

The market earned support from American Petroleum Institute data, which, as stated by trading sources, said U.S. crude inventories dropped by 1 million barrels last week. Analysts had expected growth.

Traders will be watching the official U.S. Energy Information

Administration report at 1430 GMT to verify the API figures.

Investors are also attending to the results of the U.S. central bank’s Federal Open Market Committee meeting. No policy shift is anticipated.

A soaring dollar leading to the Fed’s announcement was also a headwind for oil, as a more robust dollar makes crude more costly for other currency holders.

Open interest refers to a trader’s place in the market, long or short, reflecting their sentiment across the future value.

Oil market participants’ interest in futures was returning to lessen risks by price changes to their business – producers generally practice short positions to defend themselves from price falls. In opposition, consumers use longs to hedge against increases.

The recent wave in oil prices boosted both producers and consumers to wade into the market with their competing bets, the U.S. Energy Information Administration (EIA) stated.