Crude oil futures ended higher on Friday, as a 220,000-ton cargo ship blocked the Suez Canal for the fourth day in a row and efforts to evacuate one of the world’s largest container vessels from the critical waterway proved unsuccessful. .
The narrow channel is a crucial point for Persian Gulf oil and uncertainty about how long it will take to withdraw the oil tanker has complicated the short-term outlook for energy assets.
Read: Why the Suez Canal blockade is important for oil prices
In addition, energy traders are struggling with an extended business blockade in some parts of Europe to combat the coronavirus pandemic, implying lower demand for energy products.
These two events have led to crude oil prices, which have been vulnerable to major news after US and international benchmark oil contracts fell in correction earlier this week, defined as a drop of at least one 10% over the recent peak.
“The fundamental backdrop of oil markets has deteriorated this week as consumer demand estimates are revised, but short-term uncertainties surrounding the Suez debacle keep material prices falling,” he said. dir Tyler Richey, co-editor of Sevens Report Research.
West Texas Intermediate Crude for May Delivery CL.1,
CLK21,
the U.S. benchmark added $ 2.41, or 4.1%, to settle at $ 60.97 a barrel at New York’s Mercantile. Prices fell 4.3% on Thursday, giving up much of the 5.9% rise seen on Wednesday.
Read: The energy sector leads a year-on-year increase in raw materials; lean pork, steel prices soar
May Brent cru BRNK21,
BRN00,
added $ 2.62, or 4.2%, to $ 64.57 a barrel at ICE Futures Europe, after 3.8% of the slip a day ago. The world benchmark rose 6% on Wednesday.
Take a look at: Concerns over the Suez Canal accident are tilted toward natural gas
It is unclear how long the Suez Canal blockade will last, but some experts predict weeks instead of days. “It now looks like it will take a few weeks,” Anoop Singh, the Singapore-based head of analysis for transport broker Braemar ACM, told the Wall Street Journal.
It is estimated that 10% of total maritime oil trade passes through the Suez Canal, which connects the Red Sea to the Mediterranean Sea.
Reuters reported that the owner of the MV Ever given container ship, Shoei Kisen, denied speculation that it could be withdrawn as early as Saturday night, which would have set the stage for a drop in energy prices.
The blockade has altered oil flow down the canal, but during the week WTI crude lost about 0.8%, while Brent crude rose 4 cents, according to first-month contracts, according to Dow Jones Market Data.
“The impact of the shipping logistics nightmare market should be contained in regional physical markets,” because global oil reserves remain “historically high,” Richey told MarketWatch. “Even if the key navigation lane remains blocked for weeks, major oil consumers should be able to absorb disruptions with healthy local storage.”
The Energy Information Administration reported on Wednesday a fifth consecutive weekly increase in U.S. crude inventories, which currently stands at about 503 million barrels, about 6% above the first-year average of this year. time of year.
Baker Hughes BKR data on Friday showed that the number of active U.S. oil drilling rigs increased from six to 324 this week, which also indicates the potential for higher production.
Given a broad supply of crude, traders have focused on “deteriorating fundamentals due to European blockages and subsequent revisions for consumer demand estimates over the medium term,” Richey said.
However, in a note dated Friday, Goldman Sachs analysts believe the fall in prices “far outweighs changes in oil fundamentals.” They expect a return of the blockades in most of the European Union region until April, but said the impact on transport will remain modest.
Goldman Sachs expects global demand to accelerate by 4.5 million barrels a day during the third quarter compared to the first quarter, even though it is 800,000 barrels a day below its previous forecast.
Analysts also expect a “slower rise” in the output of the Organization of the Petroleum Exporting Countries and their allies, together known as OPEC +, to “offset” the recovery in demand from emerging markets and the Union Slower European and higher Iranian exports, “With global demand still rising sharply over the summer.” OPEC + will meet on Thursday.
Complete the action in the energy market Nymex, April RBJ21 gasoline,
rose 2.4% to $ 1.97 a gallon, finishing about 1.3% higher during the week, while April’s heating oil HOJ21,
added 3.6% to $ 1.81 per gallon, down 0.7% weekly.
Read: Gasoline prices seem to be falling, but not for long
April natural gas NGJ21,
it settled at $ 2.55 per million British thermal units, 0.5% less for the session but 0.9% for the week. The contract will expire at the end of Monday’s session.