Oil extends losses in post-settlement trade on oversupply worries

 Oil prices plunged about 6% on Tuesday, falling even lower in post-settlement trade, as concerns over new pandemic curbs and slow vaccine rollouts in Europe added to oversupply uneasiness

By Jessica Resnick-Ault

NEW YORK (Reuters) - Oil prices plunged about 6% on Tuesday, falling even lower in post-settlement trade, as concerns over new pandemic curbs and slow vaccine rollouts in Europe added to oversupply uneasiness.

Brent crude futures settled down $3.83, or 5.9%, at $60.79 a barrel, after hitting a session low of $60.50. West Texas Intermediate crude (WTI) ended $3.80, or 6.2%, lower at $57.76 a barrel, after touching a low of $57.32.

Both benchmarks traded near lows not seen since Feb. 9.

The front-month Brent spread flipped into a small contango for the first time since January. Contango is where front-month contracts are cheaper than future months, and could encourage traders to put oil into storage.

In post-settlement activity U.S. crude traded as low as $57.25 a barrel, while Brent crude touched $60.27 a barrel. The shift lower came after U.S. crude oil stocks rose and gasoline inventories fell in the most recent week, according to trading sources citing data from industry group the American Petroleum Institute.

Crude inventories jumped by 2.9 million barrels in the week to March 19, compared with analysts' expectations in a Reuters' poll for a decline of about 300,000 barrels, the sources said.

Government data is due at 10:30 a.m. ET on Wednesday.

"The road to oil demand recovery appears to be full of obstacles as the world continues to fight the COVID-19 pandemic," said Bjornar Tonhaugen, head of oil markets at Rystad Energy.

"Oil prices are declining again on Tuesday, proving that last week's correction was not deep enough and that the market had been trading lately with an excessively bullish sentiment, overlooking the pandemic's risk."