West Texas Intermediate slid 1.7%, while the greenback was stronger, making commodities priced in the currency less attractive. Treasury yields also climbed. While fuel consumption is rising in many parts of the world, risks remain, with the head of the U.S. Centers for Disease Control and Prevention warning of “impending doom” as cases and deaths in the country pick up.
Oil is poised to close out a fourth quarterly advance on Wednesday, but the past week has seen volatility climb amid the Suez Canal blockage. All eyes are now on the Organization of Petroleum Exporting Countries and its allies, whose ministers gather Thursday to decide output policy for May and possibly beyond, and are expected to maintain tight curbs to deplete global inventories further.
“After some wild moves, we see some stabilization,” said Hans Van Cleef, senior energy economist at ABN Amro. “With U.S. shale not picking up fast, and prices relatively stable around $60 WTI for the moment, I would not be surprised if OPEC+ again indeed decide to roll over for another month.”
At their virtual session, OPEC and its partners will consider whether to revive part of the 8 million barrels of daily output — about 8% of global supply — that they’re withholding. At their last gathering earlier this month, the group had been widely expected to return some barrels to the market but, led by Saudi Arabia, opted not to do so given the sustained threat posed by the pandemic.
In the U.S., the battle against the coronavirus still presents a mixed picture. While the pace of jabs is picking up and is set to hit 3 million a day, cases are rising. Virus-related hospitalizations are now climbing in 25 states.
Elsewhere, traders are tracking progress toward the return of normal services through the Suez Canal after a ship that had blocked the waterway was freed on Monday. Salvagers used a combination of a full moon, high tide, and a flotilla of tug boats to shift the Ever Given, allowing traffic to resume.