WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange extended losses into early trade Tuesday, with the international crude benchmark Brent contract sliding below $68 bbl amid concern a third wave of contagion cases in the European Union, fueled by more infectious variants of coronavirus and slow rollout of COVID-19 vaccines, would dent a recovery in global oil demand.
Near 7:30 a.m. ET, West Texas Intermediate for April delivery plummeted 96 cents to below $65 bbl at $64.44 bbl and Brent May crude on ICE dropped back $1 to trade near $67.88. NYMEX April ULSD futures declined 2.41 cents or 1.3% to $1.9248 gallon and April RBOB futures retreated 2 cents to trade near $2.0842 gallon.
A third wave of COVID-19 infections appear to be sweeping across the European Union, triggering fresh lockdown measures across the region's largest economies. Italy announced Monday it would shut down eleven hard-hit regions, reclose schools and all nonessential businesses until at least April 6. Germany, which remained in a nationwide lockdown since December 2020 and just recently began easing some of those restrictions, is now facing another spike in new infections this spring.
European Union increasingly looks like a drag on a global oil demand recovery in the first half of the year, prompting forecasting agencies to revise lower demand projections for the first and second quarters. Organization of the Petroleum Exporting Countries reduced its second quarter global oil demand forecast by 310,000 barrels per day (bpd) from February's estimates to 95.61 million bpd which compares with demand in the second quarter 2020 at 83.07 million bpd when the pandemic shutdown most of the world's economy.
Europe's struggles with the virus comes as their vaccine rollout remains painfully slow and mired with multiple setbacks. On Monday, Germany and France joined the growing list of countries that suspended the use of AstraZeneca vaccine due to safety concerns. Bloomberg vaccine tracker shows both countries managed to vaccine only about 7% of their citizenry despite the dire need to control the spread of the pathogen.
In contrast, the number of Americans who received the COVID-19 vaccine climbed above 100 million on Monday, accounting for over 20% of the total population. Last week, the country administered about 2.43 million doses a day. At this pace, it will take an estimated five months to cover 75% of the population with a two-dose vaccine regimen. Accelerated pace of vaccinations and declining infections boost the public confidence that the country could see some degree of normalcy as early as this summer.
February's retail sales reading, in that respect, could provide an early indicator of how comfortable the American consumer was last month in their spending as the economy reopening picked up pace. U.S. Bureau of the Census will release last month's data 8:30 a.m. ET, with consensus calling for 0.5% decline after 5.3% spike in January sales.
Federal Reserve Open Market Committee will update the markets on their latest forecast for inflation and economic growth on Wednesday with the release of their economic projections. The quarterly release by the central bank in December indicated Fed officials expected improvement across all variables from 2020 to 2021.
Liubov Georges can be reached at email@example.com