* Crude benchmarks fall for fifth session
* U.S. and Brent futures fall by most since 2020
* European caseload increase hits outlook for fuel demand
* Stronger dollar adds further pressure to oil prices
(Adds post settlement trade)
By Scott DiSavino
NEW YORK, March 18 (Reuters) - Oil prices plunged for a
fifth day in a row on Thursday, posting their biggest-one day
declines since last summer on growing worries about rising
COVID-19 cases in Europe and the strengthening U.S. dollar.
Several large European economies have had to reimpose
lockdowns as caseloads rise, while vaccination programs are
slowing due to concerns about side effects of the AstraZeneca (NASDAQ:AZN)
vaccine that was being widely distributed in Europe.
U.S. heating oil HOc1 and gasoline RBc1 also both fell
more than 5%.
"A best-case scenario for demand recovery had been priced
into this market. Everyone was celebrating the vaccine rollout
and reduced restrictions," said John Kilduff, partner at Again
Capital LLC in New York.
"Now in Europe, it's gone off the rails almost completely.
Lockdowns in Poland and Italy strike at the heart of this whole
demand recovery narrative and thesis that pumped up prices."
Brent LCOc1 futures dropped $4.72, or 6.9%, to settle at
$63.28 a barrel, while U.S. West Texas International (WTI) crude
CLc1 fell $4.60, or 7.1%, to settle at $60.
Both contracts are down more than 11% since hitting recent
highs on March 8. The five-day losing streak is the longest for
WTI since February 2020 and for Brent since September 2020. It
comes after speculators built the largest long position in
CME-traded U.S. crude futures and options since 2018.
After the market close, both crude benchmarks continued to
lose ground, each shedding over $6 a barrel, or 9%.
VACCINE PROGRAMS SLOW IN EUROPE
A slowdown in vaccination programs in Europe and the
prospect of more restrictions to control the coronavirus have
tempered expectations for a recovery in fuel use.
Britain will have to slow its COVID-19 vaccine rollout next
month due to a supply crunch caused by delays in shipments of
millions of AstraZeneca AZN.L shots from India, and the need
to test the stability of an additional 1.7 million doses.
"Europe is seeing a third straight week of rising COVID-19
cases and with vaccination hurdles remaining in place," said
Edward Moya, senior market analyst at OANDA in New York.
A number of European countries have halted use of the
AstraZeneca shot because of concerns about possible side
effects, though the World Health Organization said Europe should
continue to use the vaccine. U.S. crude inventories rose for the fourth straight week
after severe cold weather in Texas and the central part of the
country in February forced shutdowns at refineries. EIA/S
Traders said stockpiles could grow further after WTI on
March 12 switched from backwardation to contango, where
front-month contracts are cheaper than the second month
CLc1-CLc2 .
The premium of the Brent front-month over its second month
LCOc1-LCOc2 meanwhile was the lowest since early February.
The dollar's rise .DXY has also contributed to the oil
sell-off. A stronger dollar makes oil more expensive for holders
of other currencies.