Benjamin Lowy/Getty Images
- Brent and West Texas Intermediate oil futures each fell by 8% during Thursday's session.
- Rising COVID-19 cases in Europe are hurting demand prospects for oil.
- A rise in the US dollar was also putting pressure on the commodity.
- See more stories on Insider's business page.
Oil prices were sharply knocked down Thursday, hurt in part by a dimmer outlook from Europe as the region battles rising COVID-19 cases counts and a sluggish rollout of vaccinations to curb the spread of the disease.
Brent oil, the international benchmark, extended its run of losses into a fifth session and West Texas Intermediate crude was in its sixth consecutive session in the red.
"Europe is struggling with COVID. Their pickup in crude demand is likely to lag the Americas and it's probably going to really threaten a lot of hopes that we were going to see a big pickup this summer," Ed Moya, senior market analyst at Oanda, told Insider on Thursday.
Brent oil fell 8% to $62.52 barrel and WTI fell by 8.3% to $59.25 per barrel.
Several European countries were recording a rise in coronavirus infections, prompting France on Thursday to declare new lockdown measures in Paris while Italy this week imposed movement restrictions.
Oil prices found no relief Thursday from the European Medicines Agency's ruling that AstraZeneca's coronavirus vaccine developed with Oxford University is safe to use. The review came after several European countries suspended the vaccine's use following reports of blood clots in some people who had been injected with the formula.
Meanwhile, oil was under pressure in the wake of the Federal Reserve's policy meeting on Wednesday during which it upgraded its growth projections for the US economy.
"You have a stronger dollar which has emerged from the surge in Treasury yields, which is also weighing on commodities as well," said Moya. The US Dollar Index rose 0.5% to 91.87.
The 10-year Treasury note yield note yield surged past 1.7% on Thursday, marking a fresh 14-month high and the 30-year yield rose to 2.5% for the first time since August 2019. Higher yields tend to make the greenback more attractive to holders of other currencies.
While the outlook for European oil demand looks weakened by the COVID crisis, there are still expectations for stronger oil demand from the US with vaccinations on the rise, said Moya.
"It's going to be a very busy summer travel season and I think jet fuel demand will also bounce back. We haven't seen airlines really increase their flights...but once we start to see that, that's going to be very positive for the demand forecast."