Oil falls on hopes Suez Canal blockage may end soon

Oil fell on Monday as a container ship blocking Suez Canal for nearly a week was partially refloated, raising hopes the busy waterway would soon be reopened and as fuel demand in Europe stayed weak.

Brent oil was down $0.29, or 0.5%, at $64.28 a barrel by 0854 GMT. US crude fell $0.55, or 1%, to $60.42 a barrel.

“Now that the Suez mini crisis is being resolved, the oil market is left to its own fundamental devices again,” said PVM Oil Associates analyst Tamas Varga.

“Attention will shift back to the stuttering inoculation programmes, the seemingly unstoppable rise in infection rates in several parts of the world and the upcoming OPEC meeting on April 1,” he added.

The stranded container ship Ever Given has been partially floated and straightened in the Canal, with further tug operations set to resume when the tide rises later on Monday.

Prices have swung wildly in the last few days as traders and investors tried to weigh the impact of the blockage of a key trade transit point and the broader effect of lockdowns to stop coronavirus infections.

Market volatility is set to continue, said Jeffrey Halley, senior market analyst at Oanda. “Given the volatility last week, Brent looks set to move to the lower end of its $60 to $65 a barrel range,” he said, while US oil is “likely to drop to the lower side of its $57.50 to $62.50 a barrel weekly range.”

The market is getting some support from expectations that the Organisation of the Petroleum Exporting Countries (OPEC) and its allies will maintain lower output levels when they meet this week.

Renewed lockdowns in Europe to curb a wave of coronavirus infections and the weak fuel demand also pressured prices, although England’s stay-at-home lockdown order ended on Monday.