Europe midday: Oil patch weakness offsets news Italy to 'significantly' ease lockdown

Stocks on the Continent had fallen further into the red in early afternoon trading as investors tried to fathom what might lie in store next for oil markets after the previous day's rout in prices.

On Monday, US oil futures for May fell into negative territory as traders balked at the prospect of having to take delivery of physical barrels when they expired on Tuesday evening, given fast dwindling storage capacity in the States.

IG chief market analyst, Chris Beauchamp, described it as the "complete breakdown of normality in one of the world's most vital components."

The historic price action in West Texas Intermediate overshadowed remarks from Italian premier, Giuseppe Conte, on Facebook, that Italy would likely ease its lockdown measures "significantly" from 4 May.

As of 1330 GMT, the benchmark Stoxx 600 was down by 2.57% at 327.08, alongside a 3.26% fall for the German Dax to 10,327.16 while Milan's FTSE Mibtel was off by 2.15% at 16,697.21.

In parallel, Brent crude oil futures for delivery in June were 23.3% lower at $20.77 a barrel on the ICE, while May WTI was changing hands at -$8.42.

June WTI meanwhile was trading at $16.44 barrel.

Against that backdrop, the Stoxx 600 Oil&Gas sector index was pacing losses and trading 4.5% lower.

To take note of, the Texas Railroad Commission was to rule on Tuesday night on whether to curb the region's oil output and reports indicated the White House might be set to approve an increase in the country's strategic oil reserves.

On a hopeful note, analysts at Citi told clients: "The global economic recession brought about by the COVID-19 pandemic will likely slow the pace of oil’s eventual recovery but we believe the actions taken by OPEC+ and by the G20 should accelerate the oil market’s recovery before the current global economic slowdown ends."

In economic data, the ZEW institute's closely-followed gauge of analysts' expectations for the German economy bounded higher in April from the prior month by 77.7 points to reach 28.2 (consensus: -51.5).

However, a sub-index linked to current conditions worsened by 48.4 points to -91.5.

The institute's director, Professor Achim Wambach, said financial experts were "beginning to see a light at the end of the very long tunnel" but added that economic growth in Germany was not expected to recover its levels from before the pandemic before 2022.

On the coronavirus front, the number of total ongoing Covid-19 infections in Italy dropped on Monday for the first time since the start of the pandemic, by 20 to 108,237.

Italian premier Giuseppe Conte followed on Tuesday morning announcing plans to "significantly ease" lockdown measures by 4 May.