Oil falls on demand concerns as lockdowns tighten

Oil prices dropped on Tuesday as stricter restrictions in Europe and a forecast for a slower demand recovery next year outweighed upbeat news from vaccine rollouts and worries about rising tensions in the Middle East.

U.S. West Texas Intermediate crude futures slid 0.8%, or 36 cents, at $46.63 per barrel. Brent crude futures dropped 0.8%, or 40 cents, at $49.89% per barrel.

London tightened lockdowns as COVID-19 cases continued to increase, while Italy said it was considering additional restrictions over the Christmas holidays. 

OPEC decreased its oil demand forecast for 2021 by 350,000 bpd amid economic damages caused by the coronavirus pandemic. Still, a rapid rollout of vaccines could boost next year’s growth forecast.

Analysts expect U.S. gasoline stockpiles rose by 1.6 million barrels last week, while distillate inventories, including diesel and heating oil increased by 400,000 barrels.