Oil futures rose sharply Wednesday to recover nearly all of the losses from the previous session, after a container ship ran aground in the Suez Canal, halting the flow of Persian Gulf oil through the crucial waterway.
Data from the Energy Information Administration Wednesday, meanwhile, didn’t have much of an impact on prices, even as the figures showed a fifth consecutive weekly increase in U.S. crude inventories.
Despite a “slightly bearish-tilted report,” Wednesday’s oil price move continues to be overshadowed by the blockage of the Suez Canal,” said Matt Smith, director of commodity research at ClipperData.
“The transit point is key for a number of commodities, and particularly crude,” he said. “The supportive influence of the blockage is transitory, however. Once we see traffic flowing again, prices will likely come back under pressure.”
Read: Why the blockage of the Suez Canal matters for oil prices
West Texas Intermediate crude for May delivery CL.1,
The bounce comes after sharp losses on Tuesday amid worries over rising European COVID cases and extended lockdowns on the continent stoked worries over the demand outlook. WTI and Brent crude both fell into correction territory Tuesday, defined as a fall of 10% from a recent peak.
Traffic in the Suez Canal, a narrow waterway that divides continental Africa from the Sinai Peninsula, came to a halt Tuesday after the MV Ever Given, a Panama-flagged container ship with an owner listed in Japan, ran aground.
“About 10% of global seaborne oil passes through the canal. This should be fixed pretty quickly though so I doubt if it will have much lasting impact,” said Marshall Gittler, head of investment research at BDSwiss, in a note.
Meanwhile, the EIA reported Wednesday that U.S. crude inventories rose by 1.9 million barrels for the week ended March 19. That marked five weekly increases in a row, based on the government data.
On average, analysts polled by S&P Global Platts forecast a climb of 1.7 million barrels for crude stocks. The American Petroleum Institute on Tuesday reported a 2.9 million-barrel increase, according to sources.
The EIA data also showed crude stocks at the Cushing, Okla., storage hub declined by 1.9 million barrels for the week.
“Refinery runs continue to recover, but still not above pre-winter storm levels — hence a modest build” in the week report, said Smith, referring to the frigid mid-February temperatures that disrupted refinery activity.
Gasoline supply was up by 200,000 barrels, while distillate stockpiles climbed by 3.8 million barrels for the week, the EIA said. The S&P Global Platts survey had forecast supply increases of 900,000 barrels for gasoline and 200,000 barrels for distillate inventories.
On Nymex, April gasoline RBJ21,
April natural gas NGJ21,
