By Peter Nurse
Investing.com — Crude oil prices weakened Tuesday as the Suez Canal was finally reopened after almost a week, with attention turning to this week’s meeting of top producers to discuss output levels.
By 9:30 AM ET (1430 GMT), futures traded 2.1% lower at $60.27 a barrel, while the international benchmark contract fell 1.7% to $63.82.
While these two contracts have gained over 20% year to date, and are set to close out a fourth consecutive quarterly advance on Wednesday, both are around 1% lower over the last month amid worries about demand recovery in Europe and the likes of India and Brazil as Covid-19 cases mount once more.
U.S. Gasoline RBOB Futures were down 1.1% at $1.9786 a gallon.
After a prolonged saga to dislodge a giant container ship stuck in the vital waterway, the Suez Canal authorities announced Tuesday that the vessel was freed and traffic had resumed. Operations are expected to return to normal within days, meaning the supply of oil will return through one of the world’s most important oil shipping routes.
With concerns about a potential shortage of physical supplies subsiding, the market is turning its focus to Thursday’s meeting of the Organization of the Petroleum Exporting Countries and allies including Russia, a grouping known OPEC+, to discuss production levels for May.
The cartel’s current agreement is resulting in more than 7 million barrels a day being kept off the market, with Saudi Arabia holding back an additional 1 million barrels.
“Prior to the weakness in the market, expectations were that the group would start easing cuts more aggressively from May,” said analysts at ING, in a note. “However, the wobble we have seen in prices means that OPEC+ will likely need to take a cautious approach once again.”
Also weighing on the oil market Tuesday is the strength of the U.S. dollar. The greenback hit its highest level in over a year against the yen and its best in over four months against the euro, as the yield on the 10-year Treasury note rose to 1.77%, its highest since the start of the pandemic.
Of additional interest later in the session will be the U.S. crude oil supply data from the for the week ending March 26. The industry body recorded a build of just under 3 million barrels last week.
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