Oil prices fell early on Tuesday as the Suez Canal reopened for ship traffic after a week-long blockage, while rising U.S. dollar put further downward pressure on crude.
Oil prices were also reacting to a potentially bearish signal about U.S. demand, after CDC Director Dr. Rochelle Walensky said on a news conference on Monday that the United States was headed to “impending doom” with the renewed rise of COVID-19 cases.
“We have so much to look forward to, so much promise and potential of where we are and so much reason for hope, but right now I’m scared,” Walensky said.
The Suez Canal blockage which was supporting oil prices at the end of last week is now over – in a week, compared to “weeks” as some had feared it would take to refloat the skyscraper-sized containership Ever Given stuck sideways in the canal.
With the Suez Canal crisis over, all eyes on the market are now once again turned to the OPEC+ meeting on Thursday, which is expected to decide how much oil production the group will keep off the market in May.
Russia favors a rollover of the alliance’s oil production cuts while seeking a slight increase for itself to meet higher seasonal demand, a source with knowledge of Moscow’s plans told Reuters on Monday.
“Prior to the weakness in the market, expectations were that the group would start easing cuts more aggressively from May. However, the wobble we have seen in prices means that OPEC+ will likely need to take a cautious approach once again,” ING strategists Warren Patterson and Wenyu Yao said on Tuesday.
Crude oil “is perhaps struggling for more upside on the continued strength of the US dollar and the uncertainty about how long the rise of Covid variants will restrain demand recovery,” Saxo Bank’s strategy team said in a note on Tuesday.
By Tsvetana Paraskova for Oilprice.com
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