Global crude oil prices have dropped by 1% on concerns over slow fuel demand recovery as the third wave of Covid-19 infections hits Europe and producers cut oil prices.

Brent crude futures for May fell by $0.68, or 1.1%, to reach $63.94 a barrel while the US West Texas Intermediate (WTI) crude futures for May delivery dropped by $0.62, or 1%, to reach $60.94 a barrel, reported Reuters.

National Australia Bank commodity research head Lachlan Shaw was cited by the news agency as saying: “(The declines) are to do with vaccine rollout issues and lockdowns in Europe.”

Europe’s biggest oil consumer, Germany is considering extending its lockdown into April to contain a third wave of Covid-19 infections. This has resulted in reduced growth forecasts by economists.

ANZ Research in a note said: “This is heightening fears that the pessimistic forecasts from both the International Energy Agency and the EIA (Energy Information Administration) recently could eventuate.”

Last week, France-based International Energy Agency (IEA) cut its crude demand forecast by 2.5 million barrels per day in 2021.

According to the environmental impact assessment forecast, the demand for global oil supply would surpass in the second half of this year.

However, under the indication of the physical crude markets, fuel demand is lower than the futures market.

Meanwhile, Africa’s biggest oil producer Nigeria announced plans to cut its official selling prices for April-loading cargoes in a bid to boost sales.

A key supplier to China, Angola still has some April unsold cargoes, indicating reduced interest from refiners in China.

Shaw said: “Physical prices have been weaker than futures have been suggesting for several weeks now.”