Crude tumbles further on Covid worries, fuel oil cracks resist full drop

London, UK (Quantum Commodity Intelligence) - Brent crude oil futures tumbled Tuesday, with the front-month May contract shedding more than $2/bbl as fears about the impact of oil demand from the resurgence of Covid-19 was coupled with a rally in the dollar index.

Lockdowns have been imposed in many parts of Europe, and there has been a sharp rise in infections in India.

By 4.30 pm U.K. time May Brent was trading at around $62.30/bbl, down $2.05/bbl from the same time Monday.

The nearby curve also shifted to flattish, with June Brent trading at $62.32/bbl at the same time, reversing the previous backwardation.

European distillate futures outpaced the drop in crude, with the first four-month contracts settling $16.25/mt ($2.18/bbl) lower.

A stronger U.S. dollar also weighed on prices.

After starting the day at 91.84 points, the dollar index rallied to 92.33 points by 4.30 pm U.K. time.

European oil product prices softened sharply, although movements relative to crude varied slightly.

Diesel barges in ARA fell around $17/mt, after trading $3.75 to $3.25/metric ton below April Low Sulfur Gasoil futures, down from a discount of around $3/mt on Monday. 

But jet barges in ARA were only $15.75/mt lower than Monday, following trades at $17/mt above April Low Sulfur Gasoil futures. This represented a slight gain in premium offsetting the weakening of distillate futures compared to crude.

The residual fuel oil market best resisted following crude oil futures all the way lower.

High sulfur fuel oil barges in ARA were down only $11.50/mt, or $1.18/bbl.