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Oil Pares Gain With Suez Canal Blockage Set to Be Cleared

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(Bloomberg) Oil pared gains on expectations that a blockage in the Suez Canal will soon be cleared.

Futures in New York traded up 2.2%, after earlier climbing as much as 3.4%. Port agent GAC said the Suez Canal Authority is close to refloating a ship that ran aground on Tuesday, easing concern that vessel traffic could remain gridlocked for days.

Crude remained up on the day after Europe posted positive economic data, with a record increase in factory output masking fresh concerns across the region about surging coronavirus infections.

Crude rose on Wednesday, but didn't recoup Tuesday's 6.2% loss

Oil prices have sunk about 13% in less than two weeks amid softening physical demand and the unwinding of long positions. The prompt timespread for Brent 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.”

  • West Texas Intermediate for May delivery advanced $1.28 to $59.04 a barrel at 11:39 a.m. London time
  • Brent for May settlement rose 2.1% to $62.05

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 congestion.

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.

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