Crude oil and energy sector-related exchange traded funds retreated Tuesday after a new wave of coronavirus infections triggered shutdown measures and slow vaccine rollouts in Europe weighed on the global growth outlook.

Among the worst non-leveraged ETFs of Tuesday, the Invesco S&P SmallCap Energy ETF (NasdaqGM: PSCE) declined 6.7%, SPDR Oil & Gas Equipment & Services ETF (NYSEArca: XES) decreased 6.9%, VanEck Vectors Oil Service ETF (NYSEArca: OIH) dropped 5.2%, and iShares U.S. Oil Equipment & Services ETF (NYSEArca: IEZ) fell 4.5%. Meanwhile, the broader Energy Select Sector SPDR (NYSEArca: XLE), the largest equity-based energy exchange traded fund, was down 1.4%.

The United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, and the United States Brent Oil Fund (NYSEArca: BNO), which tracks Brent crude oil futures, were also down 5.6% and 5.4% respectively on Tuesday. WTI crude oil futures were down 6.5% to $57.6 per barrel, and Brent crude fell 6.3% to $60.6 per barrel.

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

A threat of a third wave of coronavirus infections extended lockdowns in Europe, with a new variant of the virus on the continent. Germany, Europe’s biggest oil consumer, pushed its lockdown measures until April 18. Meanwhile, nearly a third of France entered a month-long lockdown on Saturday after a surge in cases in Paris and parts of northern France.

A strengthening U.S. dollar has also weighed on crude oil prices – oil is priced in USD so a stronger greenback makes it more expensive for foreigners to purchase the commodity.

The physical crude markets also reflect lower demand.

“Physical prices have been weaker than futures have been suggesting for several weeks now,” Lachlan Shaw, head of commodity research and National Australia Bank, told Reuters.

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