Oil prices rose Wednesday after a large container ship blocked the Suez Canal, but U.S. crude stockpiles unexpectedly rose, fueling oversupply concerns.
The Ever Given, which is longer than the Eiffel Tower, lodged sideways in the canal Tuesday, following a dust storm. It blocked a hundred ships from entering the waterway. About 12% of global trade passes through the canal, including 1 million barrels of oil a day.
Three oil tankers are reportedly stuck behind the Ever Given including one chartered by Saudi Aramco, according to a Wall Street Journal report.
A port agent told Reuters around 8 a.m. ET that the ship had been partially refloated and moved alongside the canal bank.
But ships remain gridlocked, and theSuez Canal Authority has still not said when ships can transit through the waterway.
And even if waterway traffic is resumed quickly, ships passing through the canal have been backing up for over a day, adding to supply chain disruptions.
While they move Ever Given, other factors are weighing on oil prices. Europe is experiencing its third-wave of coronavirus lockdowns with Germany, France and Italy tightening restrictions just as restrictions start to ease in the U.S.
Oil Prices, Inventories
Brent oil prices climbed 5.8% to $64.29 per barrel, and U.S. crude rose 5.9% to $61.15. But oil prices are down more than 14% from their recent highs earlier this month.
Fresh inventory data could add further pressure on oil prices.
Additionally, the U.S. Energy Information Administration reported a 1.9 million-barrel increase in crude supplies. Gasoline stockpiles fell by 200,000 barrels. Meanwhile, analysts polled by S&P Global Platts expect crude inventories to fall by 1.7 million barrels.
And late Tuesday, the American Petroleum Institute reported a 2.9 million-barrel increase in crude supplies.
Falling oil prices and rising supplies could weigh on a decision by OPEC+ on whether it will extend current production cuts. The group, which is made up of Organization of the Petroleum Exporting Countries members and top nonmembers like Russia, plans to meet on April 1.
“On the flip side, one saving grace for oil is that recent weakness in the price supports a more cautious approach from OPEC+, boosting the likelihood of production cuts being rolled over,” wrote Sophie Griffiths, a market analyst at Oanda.
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