Oil falls 1% as traffic in Suez Canal resumes

Crude Oil price fell as a container ship that has blocked the Suez Canal for nearly a week was refloated and traffic in the waterway resumed, while fuel demand in Europe remained weak amid renewed lockdowns to curb a new wave of coronavirus infections. Brent oil fell 63 cents, or 1%, to $63.94 a barrel while U.S. crude was down 63 cents, or 1%, at $60.34 a barrel. At the Suez Canal, a Reuters witness saw the giant container ship Ever Given moving after being refloated by rescue workers and salvage teams, and a shipping tracker and Egyptian TV showed it positioned in the centre of the waterway.

However, disruptions in the global shipping industry could take weeks and possibly months to clear, top container shipping lines said. “Now that the Suez mini crisis is being resolved the oil market is left to its own fundamental devices again,” said PVM Oil Associates analyst Tamas Varga. Attention will shift back to the stuttering inoculation programmes (against COVID-19), the seemingly unstoppable rise in infection rates in several parts of the world, and the upcoming OPEC meeting on April 1,” he added. Prices have swung wildly in the last few days as traders and investors tried to weigh the impact of the blocked key trade transit point and the broader effect of lockdowns to stop coronavirus infections.

Market volatility is set to continue, said Jeffrey Halley, senior market analyst at OANDA. Some European countries struggling with increased COVID-19 infections have tightened lockdown restrictions, and fuel demand across the continent remains weak, though England’s stay-at-home lockdown order ended on Monday. However, the market is getting some support from expectations that the Organization of the Petroleum Exporting Countries and its allies including Russia will maintain lower output levels when they meet this week. Russia would support broadly stable oil output by OPEC+ in May, while seeking a relatively small output hike for itself to meet rising seasonal demand, a source familiar with Russia’s thinking said on Monday. Russian oil and gas condensate output increased to 10.22 million barrels per day (bpd) in the period March 1-28 from 10.1 on average in February, two industry sources familiar with the data told Reuters on Monday, broadly in line with Moscow’s plans.