Blockage in Suez Canal Stops Sale in OilJohannes Röll 11 / May / 21 Visitors: 16
Oil is losing about 2% since Monday morning, reaching $ 63 for Brent and $ 59.60 for WTI on reports that Egypt was able to unblock the Suez Canal from the container ship Ever Given.
$ 59.60 for WTI on reports that Egypt was able to unblock the Suez Canal $ 59.60 for WTI on reports that Egypt was able to unblock the Suez Canal
Sector analysts are trying to determine how long it will take to completely eliminate the resulting congestion of hundreds of ships on both sides of the canal.
Oil is losing about 2% on Monday morning, reaching $ 63 for Brent and $ 59.60 Oil is losing about 2% on Monday morning, reaching $ 63 for Brent and $ 59.60
Economically, this incident does not affect the global balance of supply and demand for oil, the volumes of which have not changed. In a matter of days or weeks, the supply situation will return to the desired schedule.
At the same time, blocking the channel can have a psychological effect on the markets, which is no less important. There are certain restrictions on commodity and stock exchanges: trading is suspended, which often allows the unidirectional movement of the market to be thwarted.
New data from the US marks a new rise in the number of oil producing rigs last week, to highs since May. Another report earlier showed that production has returned to the level of 11 million barrels per day, where, with few exceptions, has been since June last year.
The growing drilling activity promises an increase in production volumes in the coming months, although now it remains at historically high levels. America produced higher volumes only from September 2018 to May 2020.
Growing drilling activity promises production growth in the coming months Growing drilling activity promises production growth in the coming months
The day before Ever Given closed the Suez Canal, Brent and WTI plunged 6%, falling below 50-day moving averages. And the dip from the peak in early March exceeded $ 10 or 15%.
There is a sufficient number of short-term speculators on the oil market who tried to play bullish due to uncertain short-term prospects. Perhaps most importantly, these developments halted a self-sustaining and increasingly picking-up downturn in the recently overheated market.
Now oil is nailed to the 50-day moving average in anticipation of an April 1 OPEC + advisory board meeting to discuss the fate of May quotas.
The speed at which oil has been falling over the past three weeks is likely to strengthen Saudi Arabia's position in favor of extending tight production quotas. The Saudis are unambiguously on the side of the bulls, despite hopes for a recovery in consumption.
Recent fluctuations have marked short-term resistance at $ 65 for Brent and $ 61 for WTI. Overcoming these values will convince the markets that the Suez pause was a necessary reset, and now oil is attractive to buyers after pulling back from the peaks in early March.
Johannes Röll was born 1978 in Brilon,Germany. Graduated RWTH Aachen University. Over the past ten years he worked as Head of the plastic card team, where he was mainly responsible for the development of the distribution, Head of sales Department and Financial Analyst,where he got experience in planning and support sales figures for branches. For the present he works as freelancer