Oil extended declines as inflation concerns rattled broader sentiment and physical markets in Asia cooled. West Texas Intermediate retreated for a fifth straight day, putting the U.S. benchmark on course for the longest losing streak in more than a year. The dollar rose, U.S. equity futures dipped and bond yields climbed amid inflation fears. Brent’s market structure has also steadily weakened in recent days.

Brent's futures spread has weakened in recent days

Oil prices have backtracked this week despite the surprise OPEC+ decision earlier this month to extend output cuts. Concern has risen that the demand recovery could stall after several European countries halted use of AstraZeneca Plc’s coronavirus vaccine, the latest blow to a stuttering rollout in the region.

“The sentiment has changed,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. “Short-term supply and demand considerations are temporarily casting a shadow over the bright future that is likely to arrive in the third quarter of the year.”

PRICES:
  • WTI for April slid 0.4% to $64.36 a barrel at 10:01 a.m. London time
  • Brent for May fell 0.3% to $67.81 a barrel

The market for physical barrels in Asia is showing signs of weakness, with muted buying from some in China. Spot differentials for cargoes to be loaded in April or May from the Middle East and Russia — which make up a large portion of the oil used by Asian refiners — have dipped, as processors use up crude from inventories.

The global recovery from the pandemic remains uneven. Among positive signals, Japan’s government will recommend that the Tokyo area emergency be lifted on March 21. But in Brazil, Covid-19 cases are expanding by record numbers, crimping activity, while in the U.K., delayed imports of the AstraZeneca vaccine will cut supply this month.