Oil drops after Ever Given container ship blocking the Suez Canal is refloated

2021 03 29T081237Z_388890586_RC2WKM93CCRG_RTRMADP_3_EGYPT SUEZCANAL SHIP.JPG
The Ever Given was partially refloated on Monday

Oil prices fell on Monday and traders breathed a sigh of relief after the giant container ship Ever Given that has blocked the Suez Canal for almost a week was refloated.

Brent crude oil, the global benchmark price, fell as much as 2% before recovering somewhat to stand 0.6% lower at $64.03 a barrel on Monday morning. WTI crude was down 1.1% to $60.30 a barrel.

The fall in oil prices was a sign that the pressure on global supply chains is set to ease, with the local authorities saying they will act fast to try to clear the backlog of ships at the crucial trade route.

The Suez Canal Authority said on Monday the Ever Given ship, which has been lodged lengthways in the canal for almost a week, had been successfully refloated and brought away from the shore. It said the ship was not yet completely free, however.

It added: “Navigation shall be resumed immediately upon the complete restoration of the vessel’s direction.”

The Ever Given, an enormous container ship almost the length of the Empire State Building, has been stuck in the canal since Tuesday, completely blocking the route and snarling up global trade.

Almost 15% of world shipping goes through the Suez Canal, which cuts through Egypt from the Mediterranean to the Red Sea.

The blockage sent oil prices sharply higher, as backlogs of energy shipments built up. Brent crude had fallen to close to $60 a barrel on Monday, but rose near $65 over the week.

Other factors affected oil prices too, however, with uncertainty surrounding demand as economies recover and a meeting of the Opec oil cartel and its allies later this week.

“Brent has been trading soft in the morning session today after reports emerged that the ship blocking the Suez Canal has been refloated though it’s still unclear how soon the trade route could be reopened,” Warren Patterson, head of commodities strategy at Dutch bank ING, said.

Jefferies analyst David Kerstens said the Suez blockage would worsen global trade, which has already been disrupted by the coronavirus crisis.

He said shipping capacity on the Asia-Europe route will be “temporarily reduced by c.25%, while port congestion is set to further increase, in a market already characterised by supply chain bottlenecks and equipment shortages, which has resulted in record-high freight rates.”

Read the original article on Business Insider

Oil climbs 4% after a grounded container ship blocks key Suez Canal trade route

AP21083299768699
The tanker is blocking the Suez Canal.

  • Crude oil prices climbed as much as 4% on Wednesday to roughly $60 per barrel, boosted by concern over a supply bottleneck.
  • A container ship is blocking the Suez Canal, which is one of the busiest trade routes in the world.
  • Oil prices have been highly volatile throughout the pandemic and lockdown cycles.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Oil rose as much as 4% on Wednesday after a huge container ship ran aground and blocked the Suez Canal, a key shipping route for crude and refined products. The blockage raised some concern about fuel supply.

Overall, the price of oil is set to fall for the third consecutive week this week. Another round of lockdowns in Europe could threaten the recovery in demand growth and have undermined some of the recent strength in the oil market.

One of the biggest container ships in the canal ran aground early on Tuesday and is stuck at a right-angle to the passage. Hundreds of cargo ships are now unable to pass through the canal, forcing them to divert their routes. It is unclear when the issue will be resolved. “This could have an impact on movement of oil and consumer goods.” Deutsche Bank strategist Jim Reid said in a daily report.

Throughout the pandemic and subsequent cycles of lockdowns and travel bans, oil prices have been highly volatile. Over the last 12 months, Brent crude oil prices have fluctuated from as little as $16 a barrel to as much as $71. As demand for oil, and therefore its price, is inherently linked to sectors that are impacted heavily by lockdown measures, such as travel, they have been sensitive to the developments of the pandemic. Over the last two weeks, prices have fallen by around 12% and are still on course for a third weekly fall, in spite of Wednesday’s rally.

The price response to the hold-up at the Suez Canal may not reflect expectations for a prolonged improvement in demand, analysts said. The futures market has eliminated a bullish structure known as “backwardation” – where prompt contracts trade at a premium to further-out futures contracts, which reflects bullishness among traders and investors about the demand outlook.

“The reprieve seems temporary, though, as the spot price fall overnight has completely removed the backwardation in the oil futures market for prompt deliveries. With speculative markets still long, it seems, oil is likely to be a sell on rallies until Covid-19 and economic recovery sentiment swings back into the black.” Jeffrey Halley, senior market analyst at OANDA, said.

Read more: MORGAN STANLEY: Buy these 10 stocks quickly that will roar higher as M&A heats up – including one with a potential upside of 114%

Read the original article on Business Insider

Oil prices whipsaw as traders digest attack on Saudi oil terminal

saudi aramco plant
A view shows Saudi Aramco’s Wasit Gas Plant, Saudi Arabia in 2014.

  • Brent oil, the international benchmark, surged above $70 for the first time in more than a year. 
  • Saudi Arabia said it intercepted drone and missile attacks aimed against its facilities. 
  • Yemen’s Houthi rebels reportedly claimed they hit the facilities they targeted in Saudi Arabia.
  • Visit the Business section of Insider for more stories.

Oil prices shot up past $70 for the first time in more than a year after key facilities in Saudi Arabia came under a missile and drone attack Sunday.

Saudi Arabia said the attacks were intercepted, with an attempted drone strike aimed at one of the petroleum tank farms in the Ras Tanura port while a ballistic missile targeted Saudi Aramco facilities in Dharan, according to the Saudi Press Agency

Brent oil, oil’s international benchmark, climbed to an intraday high of $71.38 per barrel as it packed on more than 2% from Friday’s settlement. Brent oil hadn’t traded above $70 since January 2020. The price on Monday eventually turned lower, losing 0.2% at $69.24.

The West Texas Intermediate continuous oil contract reached as high as $67.26 before pulling back. It was off $0.02 at $65.43.

Yemen’s Houthi rebels on Sunday claimed they hit facilities in Ras Tanura, according to the Washington Post. A coalition led by Saudi Arabia has been fighting against the rebels backed by Iran since 2015.

“The Ministry of Defense will undertake all necessary, deterrent measures to safeguard its national assets in a manner that preserves the security of global energy,” said Brigadier General Turki Al-Malki of Saudi Arabia’s defense ministry in a statement.

Oil prices climbed last week after the Organization of the Petroleum Exporting Countries and its allies agreed to keep production cuts intact through April, a decision made as a recovery in the market is still taking shape while the COVID-19 pandemic persists.

Read the original article on Business Insider