The market is increasingly nervous about the outlook for fuel demand as new lockdown measures are imposed and vaccination rollouts stall, analysts said.
Oil prices plunged 7% for a fifth day in a row on Thursday as several large European economies have reimposed lockdowns and vaccination programmes have been slowed by distribution issues and concerns about possible side-effects.
Several French regions, including the Ile-de-France region around Paris, will start a four-week lockdown from Friday.
"That will impact oil consumption in Europe and thus potentially give oil prices a modest headwind," Jeffrey Halley, senior market analyst at OANDA, said.
Although Germany, France and other countries have announced the resumption of inoculations after regulators declared the AstraZeneca vaccine safe, the programme halt has made it harder to overcome resistance to vaccines among some of the population.
Britain will have to slow its COVID-19 vaccine rollout next month due to a supply delay.
Goldman Sachs said headwinds related to European Union demand and Iran supply would slow the oil market rebalancing by 0.75 million barrels per day (bpd) in the second quarter, although it expects the OPEC+ grouping of the Organization of the Petroleum Exporting Countries and allies to act to offset that.
Supplies of oil are plentiful, with Saudi Arabia's crude exports increasing in January for a seventh straight month to the highest since April 2020, the Joint Organisations Data Initiative website found on Thursday.
Shipments from the world's biggest oil exporter increased to 6.582 million barrels per day in January from 6.495 million the previous month.
(Reporting by Shu Zhang in Singapore and Aaron Sheldrick in Tokyo; Editing by Leslie Adler, Richard Pullin, Ana Nicolaci da Costa and Barbara Lewis)
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.