Oil prices jumped about 6% on Wednesday after a ship ran aground in the Suez Canal, and worries that the incident could tie up crude shipments gave prices a boost after a slide over the last week.
The crude benchmarks, U.S. crude and London-based Brent, added to gains after U.S. inventory figures showed a further rebound in refining activity, suggesting U.S. refiners are mostly recovered from the cold snap that slammed Texas in February.
Brent crude settled at $64.41 a barrel, gaining $3.62, or 6%, after tumbling 5.9% the previous day. West Texas Intermediate (WTI) settled at $61.18 a barrel, rising $3.42, or 5.9%, having lost 6.2% on Tuesday.
The gains appeared to stabilize the market that had slumped from early this month, when prices hit their highest levels this year on expectations for demand recovery. Those hopes have since been dashed as European nations re-entered lockdowns to halt another wave of the pandemic.
Oil has recovered from historic lows reached last year as OPEC and its allies made record output cuts. On Tuesday, both benchmarks touched their lowest since February.
Ten tug boats struggled on Wednesday afternoon to free one of the world’s largest container ships after it ran aground and blocked the Suez Canal for more than a day, port agent GAC said.
The GAC said the information it had received earlier claiming the vessel was partially refloated, allowing traffic to resume along the fastest shipping route from Europe to Asia, was inaccurate.
“It’s one of those wild cards that is unique to the crude oil industry,” said Bob Yawger of Mizuho in New York. “Once you think you have everything nailed down, I can guarantee one thing: You don’t.”
Oil prices were also supported by U.S. Energy Information Administration data that showed refinery runs recovering after a winter storm shut Texas refineries last month.
“The refiners are coming out of maintenance and recovering from the power outages. The expectation is now that they’re getting back to work, we will see crude inventories trending lower in the coming weeks,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.
Italy, France and other European countries have re-imposed movement restrictions. But German Chancellor Angela Merkel said she was reversing a decision for a stricter Easter shutdown.
OPEC and its allies, known as OPEC+, meet on April 1 to consider whether to unwind more of their output cuts.
