Oil futures moved lower Monday, with one of the world’s largest container vessels now freed from the Suez Canal where it had run aground nearly a week ago, blocking the flow of global trade goods, including crude oil, through the crucial waterway.
Still, reports that Russia would support a rollover of oil output curbs to May has helped to offset some of the pressure from the Suez Canal developments.
Members of the Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+, will hold a technical committee meeting Wednesday, followed by a main gathering Thursday where traders expect producers to make a decision on May production levels.
The Suez Canal Authority announced on Monday that the container ship, known as the Ever Given, was successfully refloated. The vessel was moving north to an anchor point, but it was unclear when the waterway will be reopened to traffic, The Wall Street Journal reported Monday.
While the development in the Suez Canal is promising for the return of oil shipments through the water conduit, “due to the large number of vessels that have accumulated, it could still be days or weeks until the canal is fully back to normal operations,” said Louise Dickson, oil markets analyst at Rystad Energy.
“Some leftover downstream ripple effects should be expected in the meantime,” she said in daily commentary, adding that “oil loadings, as well as some oil demand could be affected as manufacturers may have to close or pause production as they wait for delayed goods to arrive at plants.”
Reports say that over 300 vessels are waiting to pass through the Suez Canal.
Against that backdrop, West Texas Intermediate crude for May delivery CLK21,
May Brent crude BRNK21,
Read: Energy sector leads year-to-date rise for commodities; lean hog, steel prices soar
On Friday, WTI posted a 0.8% weekly drop and Brent ended little changed for the week. Both contracts had marked an entrance into correction territory last week, typically defined as a drop of at least 10% from a recent peak.
Traders looked to shift their attention away from the Suez Canal this week. “You have the OPEC meeting and headlines out there that Russia supports rolling over their production cuts from April to May,” Tariq Zahir, managing member at Tyche Capital Advisors, told MarketWatch.
Russia would support a rollover to May of output curbs imposed by OPEC+, while seeking only a small hike for itself, Reuters reported Monday, citing a source familiar with Russia’s thinking.
Earlier this month, OPEC+ ministers approved a “continuation of the production levels of March for the month of April,” and Saudi Arabia said it would self-impose curbs on its production to keep prices in check, surprising markets and helping to send crude values firmly higher.
OPEC+ are holding back about 8 million barrels a day of output, 1 million of which represents Saudi production.
Back on Nymex, prices for petroleum products traded on a mixed note, with April gasoline RBJ21,
Read: Gasoline prices look set to fall, but not for long
Ahead of the expiration at the end of the day’s session, the April contract for natural gas NGJ21,
