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On Monday, March 22, oil significantly declined. Analysts predict that quarantine measures to prevent the spread of a new strain of coronavirus will considerably slow down the recovery in demand for fuel. So, Brent crude oil fell by as much as 1.1% today. By the time of writing this article, the benchmark sank by 0.29% to the level of $64.32 per barrel. WTI futures for April fell by 0.24% to $61.25 per barrel. Last week, Brent and WTI futures sank by more than 6%.
The downward movement in the oil market was largely due to the decision of the German government to extend the lockdown restrictions to contain the spread of COVID-19. Lockdown is expected to remain in force until April 18. However, according to the first draft of the upcoming bill, the lockdown can be extended for up to five months. The bill also mentions the possible introduction of an evening curfew for those areas where the highest number of cases has been detected.
The situation is also aggravated by the failure in extremely difficult vaccination rollout in the European Union. In addition to the delays in the delivery of vaccines to the eurozone, a huge number of Europeans no longer trust that the AstraZeneca vaccine is safe and effective. The drug has gained notoriety due to reports that it can cause abnormal bleeding and blood clots in the brain in vaccinated patients. Attempts of experts from the EU supervisory authority to assure the population that the benefits of the vaccine outweigh any risks miserably failed. An increasing percentage of people in Spain, Germany, France, and Italy consider the AstraZeneca vaccine unsafe and they do not want to be vaccinated with it. However, the analogs of this vaccine, Pfizer and Moderna, are far popular and therefore are still being sold among the European countries.
Judging by this news, weak demand for oil may worsen even more. Many experts predicted the recovery in the oil market. Yet, oil needs to rise far higher to reach its former levels. Demand for oil remains buoyant only thanks to a record reduction in production capacity, which was supported by OPEC and its allies.
Meanwhile, data from Baker Hughes, the US oil company, published last Friday, showed an increase in the number of operating oil rigs in the United States last week. The number of drilling rigs for oil and gas production rose by 9 to 411.
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