Oil Drops With Virus Risks in Europe Dimming the Demand Outlook - Bloomberg

Oil Drops With Virus Risks in Europe Dimming the Demand Outlook - Bloomber

• West Texas Intermediate crude for May delivery fell $2.80 to settle at $58.65 a barrel in New York
• Brent for June settlement declined $2.71 to end the session at $62.15 a barrel

Oil plunged the most in nearly two weeks as growing delays in Europe’s reopening and looming Iranian supply dampened hopes for a swift decline in global inventories.

Futures in New York slumped 4.6% on Monday, sending prices to the lowest in more than a week and markedly below U.S. crude’s 50-day moving average. The U.K. may delay global travel beyond May 17 if Covid-19 infections continue to surge around the world, while Italy also extended some restrictions for travelers, adding further pressure to a recovery in oil consumption.

Meanwhile, Iran, the U.S. and the remaining members in the 2015 nuclear deal are set to gather in Vienna on Tuesday to discuss potentially resurrecting the agreement, presenting a possible path toward removing sanctions on the Middle Eastern country’s oil exports. Yet, Iran indicated talks won’t succeed without the U.S. fully removing sanctions.

“OPEC+ deciding to phase in production increases over time, when combined with news that potentially there could be more Iranian output, could very well mean that the market perceives there will be an imbalance more than previously,” said Bart Melek, head of commodity strategy at TD Securities. “Demand from Europe being significantly slower may derail” the near-term outlook for consumption.