LONDON: Oil rose on Monday on expectations that the OPEC+ group of leading producers will keep output unchanged in May, and worries that operations in the Suez Canal might take weeks to return to normal even though a ship blocking it has been partly refloated.
Bren oil rose 58 cents, or 0.9%, to $65.15 a barrel by 1048 GMT. U.S. crude was up 40 cents, or 0.7%, at $61.37 a barrel.
Both contracts had fallen more than $1 earlier in the session.
The huge container ship blocking Egypt’s Suez Canal for nearly a week has been partially refloated, the Suez Canal Authority (SCA) said, raising hopes the busy waterway will soon be reopened for a big backlog of ships.
However, disruptions in the global shipping industry could take weeks and possibly months to clear, top container shipping lines said.
“Even if Ever Given leaves the canal within days, some leftover downstream ripple effects should be expected in the meantime,” said Rystad Energy analyst Louise Dickson.
“Oil loadings, as well as some oil demand could be affected as manufacturers may have to close or pause production as they wait for delayed goods to arrive at plants,” she added.
Prices have swung wildly in the last few days as traders and investors tried to weigh the impact of the blocked 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.
The market is also getting some support from expectations that the Organization of the Petroleum Exporting Countries and its allies including Russia will maintain lower output levels when they meet this week.
Russia would support broadly stable oil output by OPEC+ in May, while seeking a relatively small output hike for itself to meet the rising seasonal demand, a source familiar with Russia’s thinking said on Monday.
Renewed lockdowns in Europe to curb a wave of coronavirus infections weighed on fuel demand, but oil prices found some support as England’s stay-at-home lockdown order was eased on Monday.