Oil Drops Amid Rising Stockpiles and COVID-19 Demand Concerns

By Shadia Nasralla

Brent crude was $1.03 cents, or 1.5%, lower at $67.85 by 1002 GMT. U.S. crude was down 96 cents, or 1.4%, at $64.43 a barrel.

Germany, France and Italy plan to suspend AstraZeneca COVID-19 injections after reports of possible serious side effects, although the World Health Organization said there was no established link to the vaccine.

These moves are deepening concerns about a slow pace of vaccinations in the European Union, which may delay any economic recovery from the pandemic in one of the hardest-hit areas.

The pandemic eviscerated demand for oil but prices have recovered to levels seen before the global health crisis, only to be capped as vaccination rollouts have been slow in most countries.

In the United States, stockpiles are also rising because of last month’s “big freeze” which halted refining operations that have taken time to fully return.

“Short-term direction will be set by the weekly U.S. inventory reports,” PVM analysts said in a note, adding the strength of the dollar against other currencies is weighing on oil prices.

The American Petroleum Institute, an industry group, will report crude stock pile levels later on Tuesday, followed by official numbers from the Department of Energy on Wednesday, with analysts expecting another week of gains.

Crude inventories increased by 12.8 million barrels in the week to March 5, against analysts’ expectations for a rise of less than 1 million barrels.

(Additional reporting by Aaron Sheldrick; Editing by Susan Fenton)