WTI has dropped back from the $61.00 level to under the $59.00 level again but is close to its 50DMA. The positive impulse from the Suez Canal blockage news appears to be fading amid ongoing demand concerns. Front-month futures contracts of the American benchmark for sweet light crude oil, West Texas Intermediary (WTI), have dropped back under the $59.00 level from late Wednesday session highs around the $61.00 level, meaning that just over 50% of Wednesday’s gains (which saw WTI rally from just above $57.00 to over $61.00 at the time) have now been erased. On the day, that chalks up to losses of over 4.0% or more than $2.50. WTI is now trading just below its 50-day moving average (at $58.98), a level that seems to be offering reasonable support for the time being, though has been chopped through twice in the last few days. Indeed, its been a very choppy few days for crude oil markets; since last Thursday (six sessions ago, including this Thursday), crude oil prices have changed by more than 5% on three occasions and more than 3% twice, notably higher levels of volatility than has been seen in recent months – volatility is likely to continue ahead of next week’s OPEC+ confab on 1 April (next Thursday). Driving the day The positive impulse from the news of the Suez Canal blockage appears to be waning as markets refocus their attention on the worsening outlook for crude oil demand in Europe; according to Rystad Energy analyst Bjornar Tonhaugen, “if Europe was in a better state in its COVID-19 battle, then the disruption would possibly create a more prolonged issue but this is not the case”¦ That is why traders today quickly corrected some of the previous day’s gains”. In terms of the latest regarding the Suez blockade; the Suez Canal Authority says that eight tug boats are currently working to move the 400M long container ship currently blocking transit in both directions in the canal. Peter Berdowski, CEO of Dutch company Boskalis, the company that operates the tug boats, said that “we can’t exclude it might take weeks, depending on the situation”. With most major EU nations heading back into some form of relatively strict lockdown to contain increasing Covid-19 infection, hospitalisation and death rates (the widely touted “third wave” of the virus in the EU) and the bloc’s vaccine rollout still lagging compared to the likes of the US and UK, demand for crude oil in Europe in the coming months (which happens to be the destination for most of the crude oil tankers attempting to transverse the blocked Suez Canal) is likely to take a hit, which will likely offset any temporary supply disruption. There is also growing concerns about the direction of the pandemic in key emerging market economies; newly recorded cases in Brazil and India are at record highs, with the latter increasingly moving towards vaccine nationalism and threatening to block AstraZeneca vaccine exports. Looking ahead, the main driver of crude prices next week will be the OPEC+ meeting on 1 April (next Thursday). As noted above, recent higher than usual levels of crude oil market volatility might well continue heading into the meeting as various OPEC+ sources leak the varied viewpoints of cartel members going into discussions; most agree that another hike in output at this point is unlikely given 1) the above-mentioned demand concerns in Europe and elsewhere and 2) the recent sharp drop in prices from monthly highs (WTI currently trades more than 13% below its March high of just under $68.00) – OPEC sources said on Wednesday that a rollover of current production levels is the most likely outcome. FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street FXStreet News share Read Next EUR/USD remains side-lined around 1.1800 FX Street 8 months WTI has dropped back from the $61.00 level to under the $59.00 level again but is close to its 50DMA. The positive impulse from the Suez Canal blockage news appears to be fading amid ongoing demand concerns. Front-month futures contracts of the American benchmark for sweet light crude oil, West Texas Intermediary (WTI), have dropped back under the $59.00 level from late Wednesday session highs around the $61.00 level, meaning that just over 50% of Wednesday's gains (which saw WTI rally from just above $57.00 to over $61.00 at the time) have now been erased. 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