Oil fluctuates with market eyeing OPEC+ meeting, Suez Canal

Oil fluctuated between gains and losses with traders looking ahead to an OPEC+ meeting this week and as salvage teams partially refloated the giant vessel that has been blocking the Suez canal for days.

Prices have been volatile in recent days. The market’s focus remains on the impact renewed coronavirus lockdowns would have on demand, before the OPEC+ discussions on output policy on Thursday. The canal continues to be blocked days after the Ever Given lost control and ran aground, even though there has been some progress to move the giant container ship.

Oil is set to close out a fourth consecutive quarterly gain this week, aided by sustained supply curbs by the Organization of Petroleum Exporting Countries and its allies, and optimism that global demand will expand as Covid-19 vaccines. But a run of three weekly losses for WTI has put a dent, underpinning speculation that OPEC+ will continue to hold on to their output cuts.

With work to free the Ever Given appearing to make progress “the oil market is left to its own fundamental devices,” said Tamas Varga, analyst at brokerage PVM Oil Associates. “Attention will shift back to the stuttering inoculation programs, the seemingly unstoppable rise in infection rates in several parts of the world and the upcoming OPEC meeting.”

Traders were also tracking the introduction on Monday of a new futures contract, with Abu Dhabi kicking off its bid to establish a new benchmark. The product “provides an additional tool that the market has been looking for,” Khaled Salmeen, executive director of supply and trading at Abu Dhabi National Oil Co., said in an interview with Bloomberg Television.

The crisis in the Suez Canal has caused a huge backlog of ships at both ends of the vital waterway, and spurred some vessels to avoid the congestion by taking the longer, much costlier route around Africa. Rates for tankers have increased, boosting the cost of shipping crude around the world.