Crude oil plunged by more than 7% on Thursday, the worst single-day loss since April 2020, and is set to close out the week down by the most since October. The decline is the result of a combination of bearish factors – profit-taking by overly long speculators, a stronger dollar, and diminished hopes surrounding vaccinations in Europe. “There have been some bearish headlines over the last two weeks,” Helge Andre Martinsen, senior oil analyst at DNB Bank ASA, told Bloomberg. “But it’s surprising that it happened in just one day.”

Vaccine hiccups could prevent 1 mb/d of oil demand. According to Rystad Energy, a lengthier vaccine campaign in Europe – due to delays and increased hesitancy – could delay the recovery of 1 mb/d of oil demand this year.

China buys more Iranian and Venezuelan oil. China is expected to import 918,000 bpd of oil from Iran in March, the highest since U.S. sanctions went into place two years ago. The purchases have reduced the incentive for Iran to negotiate analysts say. Imports from Venezuela are also on the rise.

U.S. coal generation falls below nuclear. U.S. coal plants generated 774 million MWh in 2020, less than natural gas (1.6 billion MWh) and even nuclear (790 million MWh). Coal slipped into third place last year for the first time since at least 1949.

U.S. refining capacity still not fully restored. U.S. refining capacity is sitting at about 80% of levels seen before the Texas grid crisis in February. An estimated 1.2 mb/d of refining capacity remains offline, according to IHS Markit, due to spring maintenance and ongoing repairs.

IEA: Gasoline demand peaked, but not crude oil. Despite speculation that oil demand peaked in 2019, before the global pandemic hit the industry hard, a new IEA report suggests this assumption may have been overstated as demand is set to continue increasing until 2026.

Oil prices began crashing on Thursday afternoon, falling nearly 9%. WTI Crude slid 8.68% to $60.00 per barrel, while Brent Crude slipped 8.01% to $62.55 per barrel. It is the biggest drop in absolute terms since April 2020, when oil slipped into negative territory.

Analysts have been volleying predictions during the recent price rally, with bulls signaling there is more room to run, making proclamations of a coming super cycle. Others, more cautious in their outlooks, have warned for a couple of weeks that the optimism present in the oil markets were unjustified. The recent rally was largely on the back of OPEC+ production cuts—or rather, the fact that they agreed to hold production steady in April, instead of ramping up production as the market had anticipated. The passing of the 3^rd round of stimulus in the United States had also bolstered oil market sentiment.

But a rising dollar, increased crude inventories in the U.S., growing fears of a resurgence in coronavirus cases and vaccine safety concerns in Europe have proven worthy adversaries. Those concerns are linked directly to oil demand resurgence. And markets are viewing this demand picture as less favorable today, as shown by crude futures which show the market backwardation is waning.

WTI’s front-month contract is once again trading at a discount to the following month. Crude oil WTI April contract is now trading at $59.46 per barrel, while the May contract is trading at $59.57. WTI’s April contract is now down $5.14 on the day.

This is the fifth day in a row for oil price declines and the biggest drop in absolute terms since Apr 2020

Oil prices erased earlier gains and traded lower this morning, following an estimate by the International Energy Agency (IEA) that no supercycle for oil is around the corner amid plentiful supply and a large global spare capacity.

Just after the weekly EIA inventory report showed a crude build of 2.4 million barrels for the week to March 12, WTI Crude prices were down by 1.11 percent at $64.03 as of 10:47 a.m. EDT, while Brent Crude traded down by 1.18 percent at $67.50. Both benchmarks reversed earlier gains, which were fueled by the surprise estimate of the American Petroleum Institute (API) on Tuesday of a draw in crude oil inventories of 1 million barrels for the week ending March 12.

Oil prices turned lower after the IEA said on Wednesday in its Oil Market Report for March that it doesn’t see either a supercycle in oil or a looming supply crunch, as inventories still look ample, while OPEC+ has more than 9 million bpd of spare production capacity offline because of the cuts. “Oil’s sharp rally to near $70/bbl has spurred talk of a new super-cycle and a looming supply shortfall. Our data and analysis suggest otherwise,” the IEA said in its Oil Market Report today.

As of February, OPEC’s spare capacity – excluding Iran – stood at 7.7 million bpd, most of it in the Middle East. Non-OPEC countries taking part in the deal hold an additional 1.6 million bpd that could be brought on to the market in short order, the agency noted. The IEA also said in its annual Oil 2021 report that global oil demand would take until 2023 to return to the pre-pandemic levels of 100 million bpd, but COVID-19 would change parts of consumer behavior forever, with global gasoline demand likely past its peak already.

A rising U.S. dollar ahead of Fed’s Federal Open Market Committee this week also weighed on oil prices as a stronger dollar makes crude oil more expensive for holders of other currencies.

In addition, the suspension of AstraZeneca vaccine shots in more than a dozen European countries has raised concerns about oil demand recovery in the region as vaccination campaigns in many countries were disrupted.