Oil Up, Suez Canal Blockage Expected to Last for Weeks By Investing.com

By Gina Lee

Investing.com – Oil was up Friday morning in Asia, bouncing back from its plunge a day earlier over concerns that a large container vessel could block the Suez Canal for weeks, and in turn, blocking oil supplies through the vital waterway.

rose 0.8% to $62.47 by 12:07 AM ET (4:07 AM GMT) and jumped 1.08% to $59.19. However, both Brent and WTI futures were set to record a third consecutive weekly loss of more than 3%, following the previous week’s decline of more than 6%.

The trapped continues to be stuck in the canal, with entry barred for all ships from Thursday, and efforts to dislodge the ship continues. The efforts could take weeks, however, according to a salvage company.

“Expectations that the blockage of the Suez Canal may last for weeks raised fears of supply tightness in oil markets,” Nissan (OTC:) Securities researcher Yasushi Osada told Reuters.

“But lingering worries that a fresh wave of lockdowns in Europe and elsewhere may slow a recovery of global fuel demand are expected to limit price gains,” he warned.

Fresh COVID-19 restrictions in Europe to curb a third wave of cases will likely reduce fuel demand in the continent. Germany, Europe’s largest economy, recorded its biggest increase in COVID-19 cases since January 2021 but abruptly reversed its plans for a strict Easter lockdown on Wednesday.

Fuel demand in Asia is also under threat, with people in parts of western India ordered indoors as the country recorded its highest level of COVID-19 cases in five months.

Also putting pressure on the black liquid was the difficulty in selling to Asia, and China particularly. Asian buyers were taking cheaper oil from storage instead while refinery maintenance has reduced demand, according to some investors.