WASHINGTON (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange trimmed overnight losses on Thursday triggered by a combination of concerns over delayed recovery in global oil demand after European Union's major economies suspended the use of the AstraZeneca vaccine, rising U.S. crude oil stockpiles and downward revisions to the near-term demand outlook from the International Energy Agency.
Near 7:30 a.m. ET, West Texas Intermediate contract for April delivery declined 19 cents to trade near $64.39 barrel (bbl) and Brent May crude on ICE slipped 27 cents to $67.74 bbl. NYMEX ULSD futures traded little changed near $1.9046 gallon and nearby-month RBOB contact advanced 1.08 cents to $2.0587 gallon.
The main factor driving the petroleum complex lower Thursday morning is an uncertain path of demand recovery in the European Union after the bloc's major economies suspended the use of Oxford/AstraZeneca's COVID-19 vaccine while there's an alarming rise in new infections. The recent spike in the viral spread is thought to be triggered by new variants of the coronavirus that are seen by the medical community as more contagious and deadly. The New England Journal of Medicine this week found that the AstraZeneca vaccine is not effective against the South African mutation, further undermining the confidence in the troubled vaccine. The European Medicines Agency, meanwhile, continues to stand by its decision to approve the vaccine but is investigating further claims of blood clots triggered by the jab, which are due to be published Thursday.
Europe's stuttering vaccine rollout prompted major forecasting agencies to revise lower their outlook for global oil demand in the first and second quarters, pushing recovery in fuel consumption until later this year. The International Energy Agency said in its latest Oil Market Report global demand will likely fall by 1 million barrels per day (bpd) in the first quarter from already low fourth quarter 2020 baseline. For the year, the agency expects demand to recover about 60% of the volume lost to the pandemic in 2020 to average 96.4 million bpd.
"Renewed lockdowns, stringent mobility restrictions and a rather slow vaccine rollout in Europe have delayed the anticipated rebound until the second half of the year," said the Paris-based energy watchdog.
The same sentiment was echoed in the latest forecast from Organization of the Petroleum Exporting Countries, with the cartel last week revising lower first quarter demand by 180,000 bpd from the February projection to 93.4 million bpd. For the second quarter, OPEC projects a 95.61 million bpd world consumption rate, reduced by 310,000 bpd from its outlook published earlier this year.
Further weighing on the complex, U.S. crude oil stocks increased for the fifth consecutive week through March 12, gaining a larger-than-expected 2.4 million bbl from the previous week, according to data from the Energy Information Administration. Demand for refined products unexpectedly sagged during the week ended March 12 despite the ongoing reopenings of large U.S. states. Gasoline supplied to the U.S. market, a measure of demand, declined 284,000 bpd from the previous week to 8.442 million bpd and distillate consumption eroded a steeper 459,000 bpd from the previous week.
Liubov Georges can be reached at firstname.lastname@example.org