📖 Your Q2 Earnings Guide: Discover the Stocks ProPicks AI Highlights to Jump Post-EarningsRead more

Oil rises as Suez Canal ship runs aground, European lockdowns weigh

Published 03/23/2021, 09:49 PM
Updated 03/24/2021, 05:20 AM
© Reuters. Illustration photo of sample bottles of crude oil

By Alex Lawler

LONDON (Reuters) - Oil rose more than 1% on Wednesday after a ship ran aground in the Suez Canal raising supply concerns, although fears of a slow recovery in demand due to European lockdowns limited gains.

Ships in the Suez Canal were being diverted to an older channel on Wednesday after a large container ship ran aground, blocking vessels passing through one of the world's most important waterways.

"Price support is coming courtesy of a transport blockage," said Stephen Brennock of oil broker PVM. "Yet market sentiment will likely struggle to shake off its newfound bearish trend."

Brent crude rose $1.19, or 2%, to $61.98 a barrel by 0903 GMT, after tumbling 5.9% the previous day. West Texas Intermediate (WTI) also climbed $1.19, or 2.1%, to $58.95, having lost 6.2% on Tuesday.

"The potential disruption to supplies has lifted prices," said Jeffrey Halley of brokerage OANDA, referring to the Suez incident. "The reprieve seems temporary, though."

Oil has recovered from historic lows reached last year as OPEC and its allies made record output cuts. But both benchmarks touched their lowest since February on Tuesday, hit by worries over the pace of economic and demand recovery.

Germany, Europe's biggest oil consumer, extended its lockdown to April 18. Italy, France and other European countries have also re-imposed movement restrictions.

Adding to downward pressure, {{8849|U.S. crcrude oil inventories jumped by 2.9 million barrels last week, according to trading sources citing data from industry group the American Petroleum Institute.

The official U.S. supply report is due at 1430 GMT from the Energy Information Administration (EIA). Analysts expect crude stocks to decline by about 300,000 barrels.

© Reuters. Container ship runs aground in Suez Canal, blocks traffic

OPEC and its allies, known as OPEC+, meet on April 1 to consider whether to unwind more of their output cuts. Given the latest price drop, the prospect of further easing is "zero at this stage," Halley of ONADA said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.