Oil price rallies on Suez Canal blockage

Key points

• Oil prices Jump as Canal remains blocked for almost a week
• OPEC + meeting to maintain production levels till May
• WTI demand zone is a key level for buying interest

Oil prices have rallied on the back of Suez Canal blockage which has continued to hurt oil supply. The canal which is responsible for about 10% of the world’s trade flows and also a channel for transporting oil shipments to Europe and the Middle East has been blocked by a large container ship for almost a week. As attempts to re-float the ship continues to meet frustration, oil supplies to Europe and Middle East continues to diminish as oil vessels can’t leave or arrive at the port, leaving oil tankers with the only option of sailing round the Continent of Africa which could take up to 40days.

While attempts to re-float the ship are still on going, oil prices have reacted positively to the event.

U.S oil (West Texas Intermediate) was up about 4% with price currently at $61 a barrel on Monday, while Brent oil was up at $65 a barrel.

Expectations from the OPEC+ meeting on Thursday is likely to remain unchanged with the group maintaining production levels till May.

Technical Outlook

                                                                   U.S OIL DAILY TIME FRAME

In what appears to be a sideways movement, approaching this commodity on a daily time frame is straight forward. The demand zone which comes up at $58 has attracted buying interest for a week. However, there has not been much buying pressure to send price to $68 supply zone. A convincing break below the $58 zone will set the tone for a bearish trend.