Oil Prices Drop 4% amid Concerns about European Lockdowns

Oil prices continued to decline on Tuesday, posting huge losses in early trades during the American session.

Concerns about renewed lockdowns in Europe, especially France and Germany, are negatively impacting the outlook for demand recovery. Last Saturday, France announced a major four-week lockdown to combat the spread of the virus, while Germany plans to extend preventive measures, with Chancellor Angela Merkel imposing lockdown during the upcoming Easter holiday.

The global benchmark, Brent crude futures are down by $2.79, or 4.32%, at 61.83 per barrel.

Meanwhile, the U.S. West Texas Intermediate (WTI) futures are down by $2.88, or 4.7%, at $58.66 a barrel.

A recent report by the Organization of the Petroleum Exporting Countries (OPEC) expected demand recovery during the second half (H2) of 2021, however, with slow rollout of vaccines and the rising number of Coronavirus cases leading to lockdown and preventive measures, investors are worried about the prospects of a strong recovery.

In addition, a recent report by the International Energy Agency (IEA) suggested that the global demand for oil would not return to its pre-pandemic levels until 2023.