Oil Trades at $65 as Authorities Refloat Ever Given Ship

By Adedapo Adesanya

Crude oil remained in the positive territory on Monday as the Ever Given container ship was dislodged and refloated after blocking the Suez Canal for almost a week.

The closure of the Suez Canal led to a moderate price rally last week, which came after a significant decline in oil prices, triggered by new and stringent lockdowns in Europe.

This continued moderately yesterday as the Brent crude rose by 48 cents or 0.74 per cent to trade at $65.05 per barrel, while the West Texas Intermediate (WTI) gained 61 cents or one per cent to sell at $61.58.

Market analysts understand that the impact of the Suez Canal crisis on oil markets has been marginal due to a number of factors, including slowing demand, especially in Europe, and high inventory figures.

In addition, the low volumes of crude oil passing through the canal, which is less than 5 per cent of the global supply didn’t cause much upset.

Oil prices will now have to deal with its older worries as traders and investors especially the impact of lockdowns in the wake of COVID-19 infection.

The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) is scheduled to hold a meeting this week to decide its production policy in May. OPEC+ will meet on Thursday, April 1.

It is believed that multiple factors may impact the group’s decision as the market is expecting rollover of current cuts through May, considering the uncertainty about the global demand recovery,

If OPEC+ decides to roll over current cuts, the question remains whether Russia and Kazakhstan will continue to be allowed to increase production to pre-agreed levels as it was done at the last meeting. Russia is set to increase its production by 125,000 barrels per day in April from 9.18 million barrels per day in February.

The group is also expected to emphasise compliance levels, especially for countries that failed to meet their output quota in recent months such as Iraq and Nigeria.

Optimism was also being supported by the success of vaccine rollouts in the United States and Britain, where infection rates are also slowing and officials move to ease some lockdown measures. England also ended its stay-at-home lockdown order on Monday.