Global crude oil prices dropped approximately 1% as fresh lockdowns in European countries raise concerns over recovery in fuel demand.
Brent crude reduced by $0.60, or 0.9%, to reach $63.93 a barrel, whereas US oil dropped by $0.68, or 1.1%, to $60.74 a barrel, reported Reuters.
Axi chief global market strategist Stephen Innes was quoted by the news agency as saying: “The reality is that we’re still a long way from a full demand recovery, and it’s the record levels of withdrawn production capacity that’s the main prop for the oil market.”
Under a draft proposal, Germany is planning to extend lockdown into a fifth month to contain Covid-19 infections following a surge in the number of new cases.
To balance global markets following the drop in fuel demand during the Covid-19 pandemic, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) have agreed to maintain production cuts.
Meanwhile, the US oil and gas industry witnessed a surge in the most oil rigs since January in the week ending 19 March, taking advantage of the increased oil price earlier on optimism about returning demand.
Baker Hughes in its report said that the oil and gas drilling rig tally, an early indicator of future production, increased to 411 last week. This represents its highest since April 2020.
Over the past seven months, the oil rig count has been increasing and is nearly 70% up from a record low of 244 in August last year.