Brent crude futures added 1.1%, to $61.48 a barrel, and WTI crude futures jumped 1.1%, to $58.39 a barrel
Oil prices gained more than 1% on Wednesday as investors sought bargains after the previous day’s slump, but the recovery was stunted by concerns of a slow recovery in demand due to new pandemic lockdowns in Europe and a build in U.S. crude stocks.
Brent crude futures LCOc1 added 69 cents, or 1.1%, to $61.48 a barrel, after stumbling 5.9% and hitting a low of $60.50 the previous day.
West Texas Intermediate (WTI) crude futures CLc1 jumped 63 cents, or 1.1%, to $58.39 a barrel, having shed 6.2% and hit a low of $57.32 on Tuesday.
Both benchmarks hit their lowest levels since early February on Tuesday and have now dropped nearly 14% from their recent highs earlier this month. Front-month spread for both Brent LCOc1-LCOc2 and WTI CLc1-CLc2 skidded into a small contango, where front-month contracts are lower than the later months, a sign that demand for prompt crude is declining.
Investors adjusted positions from Tuesday’s sharp selloff, said Kazuhiko Saito, chief analyst at commodities broker Fujitomi Co. But the market sentiment remained bearish due to growing concerns about demand recovery in the wake of new pandemic curbs in Europe.
Germany, Europe’s biggest oil consumer, extended its lockdown to April 18, and Chancellor Angela Merkel urged citizens to stay at home for five days over the Easter holiday. Over the pace of the recovery from the pandemic were also heightened after a U.S. health agency said the AstraZeneca Plc AZN.L vaccine developed with Oxford University may have included outdated information in its data. Patterns, in general, have been for the markets to pare back on initial lockdown announcements but then to recover. However, there are more worries at the moment about a lagged rise in US COVID-19 cases to follow in Europe’s footsteps due to Spring break festive proclivities, Stephen Innes, chief global market strategist at Axi said in a note.
So, there is still a chance there could be more pain to come, he said.
Adding to pressure, U.S. crude oil stocks climbed by 2.9 million barrels in the week to March 19, against analysts’ expectations in a Reuters’ poll for a decline of about 300,000 barrels, according to trading sources citing data from industry group the American Petroleum Institute.
Gasoline stocks dropped 3.7 million barrels, compared with expectations for a build of 1.2 million barrels.