WTI closes under $60
Oil tankers on the move in Suez Canal, fears of weaker demand take stage
A bullish supply disruption fear trade has given way to caution.
A massive, marooned container ship, sideways and blocking the Suez Canal, was refloated March 29, making way for oil cargoes and other freight to traverse the vital waterway.
The NASA Earth Observatory said its satellite imagery showed the traffic jammed up around the canal’s two ends March 31 was substantial and likely to take some time to disperse.
But once oil began to move again on the Suez, markets returned to demand worries over new waves of COVID-19 infections, and hiccups in vaccine rollouts.
Alaska North Slope crude fell March 30 by $1.15, closing at $64.11 per barrel, while Brent fell by 84 cents to $64.14 and West Texas Intermediate fell $1.01 to close at $60.55.
The slide continued March 31, ANS falling $1.04 to $63.07, Brent down 60 cents to $63.54, and WTI down $1.39 to $59.16.
It was a lucky moon and a mighty tide that saved the day and prevented a much longer, more complicated salvage operation of the 1,312-foot-long ship Ever Given.
A full moon, known as the full Worm moon, delivered a high spring tide - about 18 inches above normal, which eased the process of straightening out and dislodging the ship in efforts with tugboats, dredging equipment, and backhoes, according to NASA.
“Spring tides occur when tides ‘spring forth’ during new and full moons - when the Earth, Sun, and Moon are in alignment,” NASA said in a March 27 report.
As the Ever Given drifted from the headlines, traders tuned in to signs that throw expectations on the schedule of the pandemic recovery into question.
New infections flared up, while snafus in vaccine programs were further complicated by a trend of non-participation in vaccine programs.
In Europe, concerns over rare blood clotting seen in recipients of the Astra Zeneca vaccine have cooled public enthusiasm for the medicine, and some governments have restricted or discontinued the use of it.
Bullish on flyingIn the United States, passenger air travel - as measured by travelers passing though TSA checkpoints - has maintained a pattern of recovery from pandemic-induced downdrafts of 2020, hitting a high of 1,574,228 passengers March 28, up from only 180,002 on the day in 2020. In 2019, 2,510,294 travelers passed checkpoints on the day.
In France, however, a month-long lockdown will keep travel plans closer to the ground.
President Emmanuel Macron ordered France into its third national lockdown March 31, saying schools would close for three weeks to avert a third wave of COVID-19 infections threatening to overwhelm hospitals, according to a March 31 Reuters story.
“The announcement means that movement restrictions already in place for more than a week in Paris, and some northern and southern regions, will now apply to the whole country for at least a month,” Reuters said.
OPEC+ cautionThe Organization of the Petroleum Exporting Countries signaled that it expected to continue along a curve of demand recovery, based on a release from its 50th Joint Technical Committee meeting via videoconference March 30.
OPEC Secretary General Mohammad Sanusi Barkindo said in opening remarks to the committee that the group must remain cautious and attentive to changing market conditions, after a month that saw many positive developments but also revealed ongoing uncertainties and fragility caused by the COVID-19 pandemic.
The secretary general said that the prospects for global economic growth for 2021 had improved, based on OPEC’s Monthly Oil Market Report which projected growth of 5.1% in 2021, with world oil demand estimated to rise by 5.9 million barrels per day.
But the committee later revised down oil-demand estimates for 2021.
“Global oil demand in 2021 is revised slightly to stand at 5.6 million bpd, and we need to keep in mind that demand contracted by a huge 9.6 million bpd in 2020,” the secretary general said at the OPEC 28th Meeting of the Joint Ministerial Monitoring Committee March 31.
“There is also a continuing divergence between the first and second half of 2021. The first half has again been adjusted lower, mainly due to extended measures and new lockdowns in many key parts of Europe,” he said. “In contrast, oil demand prospects in the second half have remained relatively steady, reflecting expectations for a stronger economic recovery and positive impact of vaccination rollouts.”
OPEC+ must decide whether to extend its production cuts into May, the primary matter to be worked out over the Joint Ministerial Monitoring Committee meeting, and the 15th OPEC and non-OPEC Ministerial meeting April 1.