A giant container ship got stuck across the Suez Canal on Tuesday. Since then, crude oil prices has been largely driven by the the progress of dislodging. Good news pushed crude oil to go down by 4-5% and bad news helped it fully recover the loss. Why did crude price fluctuate so wildly on the news?
I checked the size of the container ship...Super big size with 400m long. More than 300 ships are stuck on either side of the blockage. 5% of crude oil imported by seaborne methods in 2020 went through the Canal. Though, ships can take scenic route to Africa with more time and costs. A few more days of delay of 'cleaning' the Canal will impact crude oil prices.
To reduce the risk, you can walk away from crude oil until things settled down. Now, it's more news driven that market will be more volatile.
Be careful and enjoy your trade.
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1Good macro analysis! I plan to see if I can take advantage of current conditions because of that boat
JICPT
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@AmarPearson, Thanks for your comment. According to the latest news, problem has not been solved, however, crude oil price is moving in a narrow range. It seems investors are taking a wait-and-see attitude.