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Oil Tumbles 7%, Sending U.S. Crude Below $60, on Europe Worries

CommoditiesMar 18, 2021 03:00PM ET
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© Reuters.

By Barani Krishnan

Investing.com - Oil prices fell more than 7% on Thursday, tumbling their most in a day since June and sending U.S, crude futures beneath $60 per barrel, amid a surge in new COVID-19 cases in Europe and the bloc’s continued challenge with vaccinations for the virus.

New York-traded West Texas Intermediate, the benchmark for U.S. crude, settled down $4.60, or 7.1%, at $60 per barrel, after falling to $59.48, its lowest since March 3.

It was WTI’s sharpest one-day drop since June 11, when it lost 8.2%. It was also the fifth straight day in the red for the U.S. crude benchmark, which has lost 9% since its last positive close on March 11.

London-traded Brent, the global benchmark for crude, settled down $4.72, or 7%, at $63.28, after a two-week low at $62.72.

Crude prices tumbled as the number of confirmed coronavirus cases in Germany, the European Union’s largest country by population, jumped by over 17,000, the biggest daily rise since Jan. 22, data from the Robert Koch Institute for infectious diseases showed.

Large parts of Italy, meanwhile, were back in lockdown. 

The surge in European cases and more pandemic-related restrictions suggested that a third wave of the COVID-19 was building on the bloc, on the back of a sluggish immunization program.

Also weighing on oil was the International Energy Agency’s prediction that it will take another two years for global oil demand to reach pre-pandemic levels. U.S. government data showing a fourth straight weekly build in domestic crude stockpiles added to market jitters.

Sentiment was also hurt after a decision by India, the third biggest oil importer after China and the United States, to cut its purchases from Saudi Arabia by about a quarter from May after Riyadh refused to let the OPEC+ alliance of oil producers that it controls to raise output. 

New Delhi needs more oil supply, and at lower prices too, to bring down Indian pump prices for fuel that have soared from nearly a year-long of OPEC+ cuts. Iran is already defying U.S. sanctions on its oil to export crude to China at deeply-discounted prices, undermining OPEC+ cuts and the Islamic Republic could strike a deal with India as well. 

Until Thursday’s sell-off, crude had staged a rally with few interruptions over the past four months, adding about 80% to prices. Aside from optimism over COVID-19 vaccines and the reopening of the global economy from lockdown, the rally was driven by one thing: production cuts by OPEC+.

Since April, the 23-nation OPEC+ — made up of the 13-member Saudi-led Organization of the Petroleum Exporting Countries and 10 non-OPEC nations steered by Russia — has withheld between nine and seven million barrels per day of regular supply from the market.

That has boosted WTI from a historic negative pricing of minus $40 per barrel in April to highs of nearly $68 last week.

Technical charts on Thursday indicated that the U.S. benchmark had more to close, if the downside pressure isn’t alleviated soon.

“With the break below $60, WTI may be exposed to lower areas of the 100-Day SMA (Simple Moving Average) of $53.45,” said Sunil Kumar Dixit of S.K. Dixit Charting.

Oil Tumbles 7%, Sending U.S. Crude Below $60, on Europe Worries
 

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Comments (19)
RichUncle Pennybags
RichUncle Pennybags Mar 19, 2021 3:51AM ET
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Looks like a good reason we dont need another oil pipe.
Devrim Demir
Devrim Demir Mar 18, 2021 4:30PM ET
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It’s normal before the $80, same with 2009. When it reached 70, it should drop to 60, always same story :)
Anthony Armijo
Tbone Mar 18, 2021 4:30PM ET
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Except that it dropped into the 30s.
Barani Krishnan
Barani Krishnan Mar 18, 2021 4:30PM ET
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Anthony Armijo  Well, we have a Saudi-Russian cat fight this time to add to the novelty of a world-changing pandemic. Brent under $50 is fair until world travel starts picking up again.
Barani Krishnan
Barani Krishnan Mar 18, 2021 4:30PM ET
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Anthony Armijo  Apols, missed word. Meant to say, we DON'T have a Saudi-Russian cat fight this time ...
Vin Vest
Vin Vest Mar 18, 2021 4:30PM ET
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A lot of mindraped political patsies in this thread. Destroy the right.
Ernest Wong CA
Ernest Wong CA Mar 18, 2021 4:25PM ET
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I hope those "said" they'd be all in when Brent hit $70 looking at $100 :P LMAO
Ernest Wong CA
Ernest Wong CA Mar 18, 2021 4:23PM ET
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Any chance that Brent landed on $55 mark?
Barani Krishnan
Barani Krishnan Mar 18, 2021 4:23PM ET
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You mean WTI? Not yet, Ernest, but I suspect that it might be the next test.
Ernest Wong CA
Ernest Wong CA Mar 18, 2021 4:23PM ET
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Barani Krishnan  no man, I meant Brent :) cheers
Barani Krishnan
Barani Krishnan Mar 18, 2021 4:23PM ET
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Ernest Wong CA  You're a naughty man! ... that's a looong way, LOL :)
Ernest Wong CA
Ernest Wong CA Mar 18, 2021 4:23PM ET
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Barani Krishnan  LOL nothing is impossible! Brent fell from $69 mark the other day to $62 and rebounded to $63 now. :P
Barani Krishnan
Barani Krishnan Mar 18, 2021 4:23PM ET
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Ernest Wong CA  True. You should ask AbS or his half-brother MbS (yes that mxxxxxxx) what they think :)
Ivan Ivan
Ivan Ivan Mar 18, 2021 3:49PM ET
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Futures expiration has nothing to do with this. Obviously
Barani Krishnan
Barani Krishnan Mar 18, 2021 3:49PM ET
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Not until Monday, Ivan. This squeeze toward the close is a little unexpected.
Dave Jones
Dave Jones Mar 18, 2021 3:18PM ET
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Just wait until they find out the vaccine doesn't work!
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Barani Krishnan
Barani Krishnan Mar 18, 2021 3:18PM ET
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Joe Mead  True. You'll be a changed person when it happens to someone you really care for.
Scott Bailey
Scott Bailey Mar 18, 2021 3:18PM ET
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Barani Krishnan your world changes anytime someone you care for dies...doesnt change the fact that the mortality rate with covid is so minute!
Barani Krishnan
Barani Krishnan Mar 18, 2021 3:18PM ET
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Scott Bailey  Yes, but the problem of trivializing the Covid is this: It has a Russian-roulette kind of mortality impact. Save for the very young, almost anyone can fall very ill and die once infected, and it's always down to the individual and the person's immunity and other peculiarities that matter. That's why it's been such a challenge so far, and it needs to be treated with commensurate trepidation.
Scott Bailey
Scott Bailey Mar 18, 2021 3:18PM ET
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Barani Krishnan you dont make sense, all deaths are that way, you yourself could die at any moment, we dont stop driving because you could die in an accident...and on and on
Barani Krishnan
Barani Krishnan Mar 18, 2021 3:18PM ET
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Scott Bailey  You were challenging the hype over Covid mortalities and I was basically trying to explain to you why it's so. There are rules for almost everything we do in life. You've probably had at least one drink before and still got behind the wheel to drive, knowing that you were well within the permitted BAC. But can you, no matter how sober, be caught driving by a cop while drinking? No, right? Similarly, masks and Covid social orders. They don't necessarily protect you. But the law now requires them in certain places. You are welcome to even dismiss even this reply of mine as irrelevant or nonsense given your EXALTED understanding of matters.
Jurate Derkinte
CrudeWTI Mar 18, 2021 3:10PM ET
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whats that? in Europe thesame situation, like last week, like yesterday... so its not this problem
Jokers R Us
Jokers R Us Mar 18, 2021 2:43PM ET
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Blame everything on a meme virus, and not the governments response to it.
frank jones
frank jones Mar 18, 2021 2:31PM ET
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Biden needs a muzzle, it's time for Harris to declare he's mentally incompetent...
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Barani Krishnan
Barani Krishnan Mar 18, 2021 2:31PM ET
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Bill Melton  Sure the border is a problem and will be. Otherwise, he's checking the win boxes that matter. Sleepy? He made Trump sit up instead at the debate. Do nothing? He got the $1.9T passed and will get the 100 millionth shot in American arms by tomorrow.
Bill Melton
Bill Melton Mar 18, 2021 2:31PM ET
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Biden walked through the passing of the stimulus. That bill passing was a given due to tbe numbers and rules of Congress. He is president so he gets credit. Same goes for the border. The border crisis has erupted after it was dealt with under former president. Estimates by Border Patrol chief is this is and on trend to be the worse in 20 years. Biden changed policies and has to take responsibility for his actions. The media, other than Reuters/Pravda, will not let this go unnoticed. Biden is president. As such, his actions should be held accountable.
Barani Krishnan
Barani Krishnan Mar 18, 2021 2:31PM ET
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Bill Melton  Of course, EVERY president MUST be held accountable for his actions. Of course, one said he could shoot someone in 5th Ave and walk away. There are exceptions, you know.
Bill Melton
Bill Melton Mar 18, 2021 2:31PM ET
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Biden is president, not Trump, not Obama and his lie of the year: "If you like your doctor, you can keep your doctor. Because nothing should get in the way of the relationship between a family and their doctor." See, it's easy to dig up stuff out of tbe past. We can even dig up Biden racists remarks in the Senate, but lets don't. Let's concentrate on current elected officials. Biden is president. Let's focus on his accomplishments and misses. Let's take away the red herring of talking about the past and using misdirection of taking focus off of current president. We can start with him cannot name his Secretary of Defense who was standing behind him, Syria and calling Kamala "President Kamala." Those items ate not as near as important as the border crisis and tbe economy among others; however, his mental capacity is an issue that the WH and dems should take ownership. That is the elephant in the room...and he is the president. Leadership??? Hmmm.
Barani Krishnan
Barani Krishnan Mar 18, 2021 2:31PM ET
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Bill Melton  I only hit the rewind button because there is still a massive attempt to stop Biden's predecessor from being held accountable for actions at the tail-end of his presidency. Yes, but let's not argue about that because THAT is the PAST as you say. Let's focus on the PRESENT, yes. I'm sure everything has its expiry date and with you suggesting Biden's already past his, I'm also keen to see how long he can keep up. One thing I agree with you is that this is NOT a game of keeping scores and there are REAL CONSEQUENCES here for the nation. Yet, democracy is a strange animal that must be allowed to live out its course -- regardless what the Hannities, Carlsons and Bartiromos of the world say.
Alan Rice
Alan Rice Mar 18, 2021 1:39PM ET
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Free oil again?? Will greed, laziness, sloth, apathy, and World Governments Mismanagement Destroy all life on Earth ?? Stay tuned !!
Barani Krishnan
Barani Krishnan Mar 18, 2021 1:39PM ET
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$60+ per barrel is FREE? Please look up the definition of "free", and also oil economics, particularly what nearly $70 per barrel of Brent (before today's selloff) meant to a consuming nation like India.
shanthira *
shanthira * Mar 18, 2021 1:39PM ET
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Barani Krishnan why are you over reacting? well if saudi increased their production like india wished, this would have happened sooner and it might have been even worse.
Bill Melton
Bill Melton Mar 18, 2021 1:39PM ET
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Ask California how that is working for them. They removed fossil fuels from their grid. Now they have people calling customers to see if they are using high amperage items during peak times. In addition, they have rolling blackouts. Guess what wind turbines need to operate? Lubricants from fossel fuel. How do they get turbines into location? Trains, which use diesel. Large trucks and cranes that use diesel. The dirty secret on wind turbines is that they are made of steel. Most steel in the world is made in basic oxygen furnaces, & most of those furnaces use coal as their heat source. Most wind turbines are made in Germany & China. To make plexiglass to put in restaurants, per Joe Biden's comment, you need oil. That doesn't take in effect all of tbe other related industries.Oh yea, how does Biden plan to charge all of those charging stations?
Barani Krishnan
Barani Krishnan Mar 18, 2021 1:39PM ET
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Bill Melton  Agree. To think that we will live an Uber-green world, sans all fossils, is a little absurd. But a reliance on less CO2 derivatives is certainly happening. The fuel tank as we know it could be universally lithium-ion in years to come.But crude and other parts of the middle barrel will still have their uses for sure.
Better late than never
Better late than never Mar 18, 2021 1:12PM ET
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It's good. Gas and oil are too high now
Dusty Owen
Dusty Owen Mar 18, 2021 12:02PM ET
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Europe cant do anything right
Peter Northwood
Peter Northwood Mar 18, 2021 12:02PM ET
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Yeah you're right, the US has really been good at handling in comparison...let's hope ALL countries in the world get this under control soon, to many lives lost, to much suffering, to much solitude and to many bankruptcy...
Frank Delano
Frank Delano Mar 18, 2021 12:02PM ET
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I left Europe a long time ago. Its falling apart. The UK is lucky its out of the EU
Brian McP
Brian McP Mar 18, 2021 12:02PM ET
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Peter Northwood Not sure what you're talking about. Hospitalizations are way down, positives are way down, deaths are way down. The vaccine roll-out has been going well enough so that they let me get it and I'm in the lowest tier of priority. Most of the reporting on how "bad" we handled it was false and malicious news reporting.
Jurgen Daub
Jurgen Daub Mar 18, 2021 12:02PM ET
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i think it started getting better mid January...
Yori Boyka
Yori Boyka Mar 18, 2021 10:57AM ET
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oil why it is droping
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First Last
First Last Mar 18, 2021 10:57AM ET
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someone is selling of oil lately
Mushtaq Khan
Mushtaq Khan Mar 18, 2021 10:57AM ET
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Due to Covid-19 and lockdown, people lost jobs no work and many companies operating from the residence & online so there is no use of vehicles as before.
Michael Serafini
Michael Serafini Mar 18, 2021 10:57AM ET
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Less drilling in US. Stockpiles down 1 million barrels last week
Vladislav Kk
Vladislav Kk Mar 18, 2021 10:57AM ET
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casino
Vladislav Kk
Vladislav Kk Mar 18, 2021 10:57AM ET
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casino broke
Yori Boyka
Yori Boyka Mar 18, 2021 10:56AM ET
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whats happen with pil
Abdulkarim Saleh
Abdulkarim Saleh Mar 18, 2021 10:54AM ET
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now buy oil
Maame Esi
Maame Esi Mar 18, 2021 10:51AM ET
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Now. A days trading has become boring
Dev Anand
Dev Anand Mar 18, 2021 10:50AM ET
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Expecting more downside price in coming week.
Abdul Rahim safi
Abdul Rahim safi Mar 18, 2021 10:48AM ET
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