Oil prices sink 4% as European COVID curbs raise demand worries

Oil prices sink 4% as European COVID curbs raise demand worries

Oil futures fell sharply Tuesday, pressured by fears renewed lockdowns to combat the coronavirus pandemic in Europe would crimp energy demand.

West Texas Intermediate crude for May delivery CL.1 CLK21 down $2.44, or 4%, at $59.12 a barrel on the New York Mercantile Exchange. May Brent crude BRN00 BRNK21, the global benchmark, dropped $2.69, or 4.2%, to $61.93 a barrel on ICE Futures Europe.

Germany, Europe's largest economy, extended its lockdown measures by another month to April 18, and imposed several new restrictions in an effort to drive down the rate of coronavirus infections.

"A surge in virus cases in mainland Europe, where the rollout of vaccines has been painfully slow, has cast doubt on resumption of travel in the region“¦Among other things, this is hurting demand projections for crude oil and holidays,“ said Fawad Razaqzada, market analyst at ThinkMarkets, in a note.

While Europe is struggling with extended shutdowns, the opposite is happening in the U.S., noted Carsten Fritsch, analyst at Commerzbank, where a continued easing of restrictions, vaccine rollouts and the release of government financial aid checks are expected to boost demand for crude in the world's largest oil-consuming countries.

The divergent trends were evident in the crack spreads “” the differential between products produced