The price of crude oil slumped more than 2% on Monday following news from the Suez Canal that salvage crews have managed to move the giant container ship that has been blocking the vital global trade passage for nearly a week.
International benchmark Brent fell 2.1% to $63.19 a barrel while US West Texas Intermediate dropped 2.4% to $59.49 per barrel.
The stranded ‘Ever Given’ ship was successfully refloated on March 29 and was being secured, a global provider of marine services, Inchcape Shipping, said on Twitter.
The breakthrough came after intensive efforts that saw 10 tugboats work to push and pull the ship as several dredgers vacuumed up the sand at spring tide. It’s still unclear when the canal will reopen for traffic now that the vessel has been dislodged, Inchcape Shipping added.
The 224,000-ton container has been stuck and clogging up the waterway since Tuesday last week after it lost the ability to steer amid massive winds and a sandstorm. The incident caused the temporary suspension of navigation in the Suez Canal, delaying hundreds of other container ships, bulk carriers and oil-laden tankers.
Oil prices have swung wildly since then as traders and investors tried to weigh the impact of the blockage of the trade transit point. According to a senior market analyst at OANDA, Jeffrey Halley, oil market volatility is set to continue.
“Given the volatility last week, Brent looks set to move to the lower end of its $60.00 to $65.00 a barrel range,” he said as quoted by Reuters. US oil is “likely to drop to the lower side of its $57.50 to $62.50 a barrel weekly range.”
Analysts say that prices are getting some support from expectations that the Organization of the Petroleum Exporting Countries (OPEC) and its allies will maintain lower output levels when they meet this week.
“With the Suez and OPEC+ uncertainties on top of a foggy demand picture, we may see big mood swings and high intraday volatility,” Vandana Hari, founder of consultancy Vanda Insights, told Bloomberg, adding, “I don’t see how OPEC+, or the Saudis, could risk putting more oil into the market after the downward pressure on crude of the past fortnight.”
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