Brent rallies amid Suez Canal block, European oil products mixed
Brent rallied Friday amid the blockage of the Suez Canal, leading to a mixed bag of price rises in the European oil product complex.
The front month May crude future gained $2.58/b by 16.30 U.K. time compared to Friday, but most of the gains occurred overnight during Asian trading hours.
May Brent opened trade at $62.01/bbl, climbed to $63.27/b by 16.30 in Singapore, and then rallied further to $64.40/bbl by 4.30pm in the UK.
The 400 metre-long Ever Green dry bulk container ship remains wedged across one of the narrowest stetches of the Suez.
As many as 10 crude tankers carrying around 13 million barrels of oil could be affected by the Ever Green, which blocked the canal early on Wednesday, oil analytics firm Vortexa said.
The approximate rate of backlog is around 50 vessels per day, and any delays leading to re-routings will add 15 days to a voyage between the Middle East and Europe, Vortexa noted.
Noises before the OPEC meeting this weekend also supported the rally, with the cartel expected to keep production the same in April as March.
Saudi Arabia and the UAE have both spoke out in favour of the need to tread lightly amid the resurgence of Covid-19 in many parts of the world.
There was a diverse response in lightends. Gasoline saw healthy double digit rises, with the market eying the shortage of crude barrels heading to the US Gulf.
But naphtha rose only a meagre $5.75/mt, cut off from the arbitrage to Japan and China.
Europe's structural short in middle distillates surged amid the disruption of flows from the Arab Gulf. Ultra low sulfur diesel cargo prices in northwest Europe headed the rally with gains of $23.25/mt (3.12/bbl).
Jet cargoes in northwest Europe also gained $23.25/mt, but with a lower density than diesel, the gain in barrels was $2.84/bbl.
There was a mixed bag in fuel oil. The lack of an outlet east for Europe's structural length impacted high sulfur fuel oil barges which gained only $12.75/mt ($2/bbl). But the shortage of distillates arriving from the Arab Gulf caused marine 0.5% fuel oil barges to rally $18.50/mt.