Oil rebounded, following a sell-off on Tuesday, as investors assessed the impact of a blockage in the Suez Canal and European manufacturing data beat expectations.

Futures in New York added as much as 3.4% after a ship ran aground, giving the market a reprieve after prices sank to the lowest level since early February. Despite efforts to move the vessel, it could block the route for days, according to people familiar with the situation.

Read more: Suez Canal blockage scrambles global oil and gas movement

Crude was also bolstered by positive economic data as Europe posted a record increase in factory output. That masked fresh concerns across the region about surging coronavirus infections.

Oil prices have sunk about 12% in less than two weeks amid softening physical demand and the unwinding of long positions. The prompt timespread for Brent crude has also flipped into a bearish structure for the first time since January. Oil’s recent plunge may put pressure on OPEC+ to do more to try and stem the slide, with the group meeting next week to decide on production policy for May.

“It’s all about the Suez, as well as people trying to get into oil again after the sell-off,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. “The situation is still murky in terms of lockdowns, mutations and vaccination rollout delays.”

Prices:

• West Texas Intermediate for May delivery gained $1.81 to $59.57 a barrel at 9:53 a.m. London time
• Brent for May settlement rose 3% to $62.61

The Suez Canal is frequently used by tankers transporting crude from the world’s top exporters in the Middle East to customers across Europe. The 400-meter (1,300-foot) long container ship Ever Given’s hull became wedged lengthways across the canal on Tuesday, causing a gridlock of at least 100 vessels.

Other oil-market news:

• Libya’s state oil producer is set to get the biggest portion of development spending in the country’s new budget, potentially aiding plans to raise output as the industry recovers from a decade of civil war.
• Chinese crude inventories, which include strategic petroleum reserves and commercial stockpiles, have climbed back near a peak reached in October after recent restocking, according to data from Ursa Space Systems.

 

Source - www.worldoil.com