On Wednesday, March 24, international Crude Oil futures rose sharply, influenced by supply and demand news factors.
Wednesday’s European shares in the morning session, the U.S. WTI crude oil and Brent crude oil were once up more than 4% intraday, before the U.S. stock market, the gains had narrowed to within 2%, the U.S. stock market opened and accelerated upward, the lunchtime gains expanded to more than 6%. U.S. oil rose above $61 and bunker oil stood at $64, both out of the intraday lows hit on Tuesday since early February this year.
Earlier on Wednesday, German Chancellor Angela Merkel said she supported the Easter blockade is “wrong”, decided to abandon the Easter blockade plan. Following the news, the market generally believes that the move will help boost demand for crude oil in Europe.
In addition, global shipping services company GAC said that Suez Canal traffic will resume on Wednesday or Thursday.
The Suez Canal had no choice but to declare a no-warning traffic ban after a large cargo ship from China’s Taiwan Evergreen Group, “Chang Chi”, got stuck in the middle of the Suez Canal, causing traffic jams in both directions.
Now, at least 100 ships are waiting to enter the Red Sea or the Mediterranean through the Suez Canal, and 10 oil tankers carrying 13 million barrels of crude oil are also affected by this.
Commentary points out that the Suez Canal is one of the world’s most important waterways and is a common waterway for tankers to deliver oil produced by major crude exporters in the Middle East to European countries. Some analysts believe that the impact of Tuesday’s congestion on the “Chang Chi” will soon disappear and that oil prices at the $60 level are an attractive buying opportunity.
There are also comments that the signs of fuel demand rebound and positive economic data also have a boost to oil prices. On Wednesday the Energy Information Administration (EIA), a division of the U.S. Department of Energy, reported that U.S. EIA crude oil inventories increased for the fifth consecutive week last week, while gasoline demand hit a new high since November last year. The preliminary Eurozone manufacturing, services and composite PMIs released on Wednesday all rose more than expected in March, with the preliminary composite PMI reaching 52.5, a new high since the end of 2018.
U.S. oil fell below $60 intraday on Tuesday after Germany announced its toughest blockade measures to date over Easter, once dropping nearly 7% and falling into a technical adjustment range, while bunker oil approached $60, falling more than 6% intraday.
As to why crude oil plunged on Tuesday, the Wall Street Journal article mentioned that the three major European economies, Germany, France and Italy, all expanded embargo measures, which overshadowed the prospect of a rapid consumer recovery and could have a negative impact on crude oil demand. In addition, on Tuesday, Federal Reserve Chairman Jerome Powell said during a congressional hearing that “some asset prices are a little high”, which also dampened risk sentiment.
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