DTN Oil

WASHINGTON (DTN) -- Crude and refined products futures on the New York Mercantile Exchange and Intercontinental Exchange reversed lower in early trade Friday, with both crude benchmarks falling 2% after overnight data showed eurozone's economic activity contracted at an accelerated rate this month as health authorities struggle to contain a more transmissible coronavirus variant, prompting extended lockdowns and related businesses restrictions.

"With more transmissibility, you're going to get more cases, and when you get more cases you get more hospitalizations, and with more hospitalizations you get more deaths," warned Chief Medical Advisor to the U.S. President Dr. Anthony Fauci during a news conference on Thursday.

The SARS CoV-2 variant was first detected in the United Kingdom only a month ago but has since spread across the European Union like wildfire, triggering a new set of quarantine restrictions and related business shutdown. Germany this week extended its partial lockdown into mid-February -- a move followed by the Netherlands and Denmark amid concerns that the new variant could trigger an avalanche of new infections, overwhelming national health care systems.

Eurozone's PMI data released overnight showed the full extent these lockdowns had on the bloc's economic activity, with service sector posting the second-fastest rate of decline since May and manufacturing growth weakened to the slowest pace since the recovery began. Headline eurozone Composite PMI fell from 49.1 in December to 47.5 in January, indicating a third successive monthly decline and the steepest deterioration since November.

In the United Kingdom, the original epicenter of the new variant, economic activity in service sectors slumped to 38.8 -- the lowest reading since the first nationwide lockdown was lifted early summer. Domestically, the new variant is believed to have spread in over 20 states and likely have contributed to the recent surge in new coronavirus infections, according to Fauci.

President Joe Biden unveiled Thursday a series of "Wartime Efforts" to turn around the nation's response to the coronavirus pandemic that includes the creation of a Pandemic Testing Board, nationwide mandate to wear masks on planes, intercity buses and other forms of transportation as well as provide more funding to the states for vaccinating residents.

Amazon, the nation's second largest employer, offered to help the White House distribute the coronavirus vaccine. In a letter sent to Biden, Amazon is "prepared to leverage our operations, information technology, and communications capabilities and expertise to assist your administration's vaccination effort," noting the company's large scale "allows us to make a meaningful impact immediately."

Despite all these measures, Biden cautioned on Thursday that it might take months before the nation could turn the corner in its battle with the pandemic, with the death toll likely to rise above 500,000 as early as next month.

Separately, oil traders await the release of inventory data from the U.S. Energy Information Administration on tap for 11 a.m. ET, delayed to Friday due to Inauguration Day. American Petroleum Institute late Wednesday showed U.S. commercial crude oil supplies rose 2.562 million barrels (bbl) in the week ended Jan. 15 versus calls for a draw of 1.3 million bbl while stocks at the Cushing, Oklahoma hub slid 4.285 million bbl.

Gasoline stockpiles built by 1.129 million bbl, below calls for a 2.1 million bbl gain while distillate inventories added 816,000 bbl, less than a projected 1.1 million bbl gain.

Liubov Georges can be reached at liubov.georges@dtn.com