Oil price falls 1% after container ship blocking Suez Canal refloats

By Stephanie Kelly

NEW YORK (Reuters) – Oil fell 1% on Monday, after a container ship that has blocked the Suez Canal for nearly a week was refloated and traffic in the waterway resumed.

Prices also dropped as fuel demand in Europe remained weak after countries renewed lockdowns to curb a new wave of coronavirus infections.

Brent oil dropped 65 cents, or 1%, to $63.92 a barrel by 11:17 a.m. EDT (1517 GMT). U.S. crude fell 57 cents, or 0.9%, to $60.40 a barrel.

At the Suez Canal, live footage on a local television station showed the ship Ever Given surrounded by tug boats moving slowly in the centre of the canal on Monday. The station, ExtraNews, said the ship was moving at a speed of 1.5 knots. [nL1N2LR06I]

However, disruptions in the global shipping industry could take weeks and possibly months to clear, top container shipping lines said.

“The market will soon realize that despite the positive news, even if Ever Given leaves the Canal within days, some leftover downstream ripple effects should be expected in the meantime,” said Louise Dickson, oil markets analyst.

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. England’s stay-at-home lockdown order, though, ended on Monday.

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, broadly in line with Moscow’s plans.

(Reporting by Stephanie Kelly in New York; additional reporting by Bozorgmehr Sharafedin in London and Aaron Sheldrick in Tokyo, Editing by Marguerita Choy and Gareth Jones)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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