UPDATE 7-Oil drops as COVID-19 vaccine halt threatens demand

* Germany, France, Italy suspend use of AstraZeneca (NASDAQ:AZN) shot
* Move threatens EU's already slow vaccination campaign
* Coming Up: API U.S. inventory data at 4:30 p.m. ET/2030
GMT

(Adds settlement prices)
By Stephanie Kelly
NEW YORK, March 16 (Reuters) - Oil prices fell for a third
day on Tuesday, as Germany, France and other European states
suspended the use of a major coronavirus vaccine, threatening
the recovery of fuel demand.
Brent crude LCOc1 fell 49 cents to settle at $68.39 a
barrel, while U.S. crude CLc1 dropped 59 cents to settle at
$64.80 a barrel.
Earlier this month, Brent reached its highest since early
2020, while U.S. crude hit a 2018 high.
Germany, France and Italy said they would suspend use of the
Oxford/AstraZeneca AZN.L COVID-19 vaccine after reports about
possible serious side effects, although the World Health
Organization said there was no established link to the vaccine.
Europe's medicines watchdog said the benefits of the
AstraZeneca vaccine outweigh its risks. Investors
are worried the slow pace of vaccinations in the European Union
could hurt economic recovery and fuel demand. "For oil demand to fully recover, a successful and rapid
inoculation of the global population needs to take place," said
Bjornar Tonhaugen, Rystad Energy's head of oil markets. "Before
the recent setback, there was positivity that the campaigns
under way were on the right track."
The pandemic eviscerated demand for oil. Prices have
recovered to levels seen before the global health crisis, but
gains have been capped by slow progress of vaccine rollouts in
many countries.
In the United States, crude inventories are rising as
refineries have yet to recover fully from a mid-February deep
freeze in Texas that halted their operations.
"Short-term direction will be set by the weekly U.S.
inventory reports," PVM analysts said in a note, adding that the
dollar's strength against other currencies also weighed on oil
prices.
Analysts expect another weekly gain in crude stockpiles when
the American Petroleum Institute, an industry group, reports
later on Tuesday. EIA/S
U.S. crude stocks jumped by nearly 14 million barrels in the
week to March 5, far exceeding forecasts for a rise of less than
1 million barrels.
U.S. refiners are scaling back on hiring ships for longer
periods, another sign of uncertainty over when global oil demand
will return to pre-pandemic levels, shipping and trade sources
said. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
CHART: U.S. oil may fall into $62.58-$63.61 range
Brent oil may retest support at $67.94 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>