By Peter Nurse
Investing.com -- Crude oil prices weakened Tuesday, handing back some of the recent gains amid concerns over the speed of the global oil demand recovery and ahead of the latest U.S. crude inventories data.
By 9:25 AM ET (1425 GMT), U.S. crude futures traded 1.7% lower at $64.23 a barrel, while the international benchmark Brent contract fell 1.6%, to $67.78.
U.S. Gasoline RBOB Futures were down 0.6% at $2.0913 a gallon.
Weighing on prices Tuesday was the release of data showing U.S. retail sales declined 3% in February, a lot more than the 0.5% drop expected, after a winter snap sharply reduced economic activity. This followed an upwardly revised 7.6% surge in January, the strongest advance in seven months.
This added to concern already in play over the rising number of Covid-19 cases in Europe, and the potential for extended mobility restrictions.
German coronavirus infections are spreading exponentially, up 20% in the last week, an expert at the Robert Koch Institute for infectious diseases said on Tuesday, while Italy is set to implement a new lockdown over the Easter holiday weekend.
Throw in a number of countries, including Germany, France and Italy, suspending the use of AstraZeneca PLC (LON:AZN)’s Covid-19 vaccine over concerns about blood clots, and concerns are growing about a slow pace of vaccinations in the region, which may delay any economic recovery from the pandemic.
“For oil demand to fully recover, a successful and rapid inoculation of the global population needs to take place. Before the recent setback, there was positivity that the campaigns under way were on the right track,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy.
Back in the U.S., attention will quickly turn to the release of U.S. crude inventories by the American Petroleum Institute, an industry group, later on Tuesday, followed by official numbers from the Energy Information Administration on Wednesday.
Crude inventories increased by 12.8 million barrels in the week to March 5, against analysts' expectations for a rise of less than 1 million barrels, and fears are growing that there will be another sharp rise in stocks.
“If the market fears turn true and stocks are up again, then it will be difficult for Brent to hit again $70 per barrel very soon, at least not until some positive news comes from the vaccination front, “ added Tonhaugen.