WASHINGTON (DTN) -- Crude and refined products futures on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange accelerated losses in afternoon trade Tuesday. Both benchmarks fell as much as 6% amid renewed COVID-19 shutdowns in the European Union and snags in vaccine rollout campaigns across much of the developing world that are seen undermining a recovery in global oil demand. In addition, a strengthening U.S. dollar and risk-off sentiment in financial markets further pressured the complex.
The greenback regained traction, surpassing the key 92-level to settle up 0.606 at 92.347 following remarks on the economy from Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen before the Senate Finance Committee, with both striking an upbeat tone on the progress of the ongoing recovery.
The recently approved $1.9 trillion spending bill and accelerated pace of daily vaccinations have fueled a striking outperformance of the U.S. economy compared to overseas counterparts.
"The recovery progressed more quickly than generally was expected and looks to be strengthening," said Powell on Tuesday.
Yellen added, "With the passage of the Rescue Plan, the labor market could return to full employment [as soon as] next year."
The Federal Reserve's dot-plot projections show bank officials see unemployment falling below 5% by the end of this year as the economy is seen expanding at a rate of 6.5% before moderating to 3.3% annual growth in 2022.
Despite the upbeat tone on the Capitol Hill, U.S. equities declined in line with European and Asian markets after major economies in the EU enacted strict lockdown measures and emerging economies in Latin America and Southeast Asia are now facing an avalanche of infections. Germany on Tuesday announced a hard lockdown over the Easter break, delaying its broader reopening plans until at least April 18. Traffic activity across the European Union fell into contraction in early November 2020 amid the second wave of infections and has still not recovered with the continent now facing a Spring resurgence in cases. Further restrictions in the EU could dent global oil demand by as much as 1 million barrels per day (bpd), according to estimates from Rystad Energy.
On the session, May West Texas Intermediate futures plummeted $3.80 to settle below $58 barrel (bbl) at $57.55 bbl and the May international crude benchmark Brent contract on ICE declined $3.83 to $60.52 bbl. NYMEX April ULSD futures plunged 8.04 cents or 5% to $1.7489 gallon and front-month RBOB contact dropped 6.34 cents to settle at $1.8964 gallon.
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