REPOST: All it took on Wednesday to distract crude traders from their worries over a Covid induced delay in demand recovery in Europe was a container ship running aground in the Suez Canal and blocking traffic in both directions: the accident caused West Texas Intermediate to jump by over 5 percent.
WTI for May delivery climbed $3.42 to settle at $61.18 per barrel; Brent rose 27 cents to $61.06 per barrel by 0108 GMT.
Oil prices were also supported by signs of stronger gasoline demand in the U.S., specifically: an inventory report released by the Energy Information Administration showed the four-week rolling average for gasoline demand climbed further above 8 million barrels per day (bpd) last week, the highest in four months.
Also, the American Petroleum Institute reported that gasoline stocks fell by 3.7 million barrels, compared with expectations for a build of 1.2 million barrels.
Domestic refineries processed 14.4 million bpd of crude, near levels seen before February’spolar freeze, but at least part of the surge is reportedly
due to oil executives being cautious about the potential for oil and gas policy changes under U.S. president Joe Biden-as well as the threat that the Organization of the Petroleum Exporting Countries (OPEC) and partners could easily return oil to the global market.
A Federal Reserve Bank of Dallas survey released on Wednesday showed that more than half of executives said they were not hiring more workers and were concerned about the Bidenadministration; one stated, “I believe that it is their goal to effectively shut down our industry, and they will pursue that end with great energy.”
Although analysts on Tuesday worried that new European lockdowns to combat Covid would curb demand recovery, on Wednesday they seemed to acknowledge (echoing the earlier sentiments of some experts) that the recent massive crude sell-offs may well be just a temporary blip in an overall upward trajectory.
Bill O’Grady, executive vice president at Confluence Investment Management, said, “The market was due for a correction, but we’ve had it and now it’s over; the short-run outlook is looking better, [and] more vaccines in arms and more people able to get around is all good news.”
Meanwhile, it was said that efforts would resume on Thursday to free the Ever Given, a container ship longer than the Eiffel Tower that ran aground in the southern part of the canal in Egypt; despite efforts to release it with tugs and excavators it remains stuck between both banks of the narrow canal, and more than 150 ships are gridlocked as a result.
Ship & Bunker