Oil Price Retraces with Europe’s Tighter Restrictions

Oil price receives the weight of the old continent’s decision to adopt stricter and extend lockdown measures.

France announced last week a new partial lockdown which affects the capital city Paris amid the third wave of infections. 

The country now has 4.2 million recorded infections since the start of the pandemic last year.

The curb started to take effect on Friday. It increased both traffic and train reservations as citizens rush to leave the capital to go back to their hometowns.

Similarly, Poland is adopting a three-week restriction after the nearly 50% increase of cases from a week earlier, with a high death toll of nearly 50,000.

Meanwhile, other pullers of crude oil Brent’s performance include the bloc’s leading economies, namely Italy and Germany.

The former issued new rounds of curbs a year after the country formally entered national lockdown.

The latter’s Chancellor will convene a meeting with the country’s 16 governors to discuss the next moves to take.

The policymaker was originally considering getting the nation out of the restrictions under a three-step strategy. This would make the transition relatively smoother for citizens.

On the other hand, the current situation might require a deviation from the original plan.

In the latest charts, the European benchmark’s futures contract is trading at $64.16 per barrel after shedding off 0.57% earlier.

It is farther away from achieving the original target price for last week, which is at $70 per barrel.

Consequently, the West Texas Intermediate failed to dodge the bullet and fell by 0.54% to $61.11 per barrel.

The American benchmark remains relatively steady above the psychological threshold of $60 per barrel.

US Energy Information Administration Hints

On the other hand, analysts are unsure whether until when will the WTI stay above this support level, given the recent turn of events.

Moreover, the US Energy Information’s report last week might add to the building market uncertainty.

For the week ending March 12, the US agency updated a crude inventory rise of 2.4 million barrels for the week. This is against the 400,000 barrels forecasted by analysts.

On the other hand, the American Petroleum Institute opposed the findings and reported a 1 million barrel decline.

Market strategists are more convinced that overall demand will now take turns from lukewarm to sour amid new restrictions in Europe.

Prices are projected to continue declining for the time being, despite the recent decision of OPEC to extend production cuts.