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Oil Slightly Rebounds on Fears Suez Blockage may Last Weeks

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Oil prices reversed a sharp selloff a day earlier to rise 1 on Friday on mounting fears that it could take weeks to dislodge a giant container ship blocking the Suez Canal, which would squeeze supplies of crude and refined products.

Prices, however, were still headed for a third consecutive weekly loss, with the outlook for demand dented by fresh coronavirus lockdowns in Europe.

Brent crude was higher by 54 cents, or 0.9, at 62.49 a barrel by 0432 GMT, after dropping 3.8 on Thursday.

U.S. West Texas Intermediate WTI crude was up

65 cents, or 1.1, at 59.21 a barrel, having tumbled 4.3 a day earlier.

Both benchmarks were on track for a weekly loss of about 3, following a more than 6 decline last week.

The trapped container ship is blocking traffic in the Suez Canal, one of the worlds busiest shipping channels for oil and refined fuels, grain and other trade between Asia and Europe.

Officials stopped all ships entering the canal on Thursday, and a salvage company said the vessel may take weeks to free.

Fears of supply tightness grew as the key Suez Canal remained blocked by the giant ship, outweighing concerns over weak demand due to lockdowns in Europe and Asia, said Satoru Yoshida, a commodity analyst with Rakuten Securities.

Of the 39.2 million barrels per day bpd of total seaborne trade in crude in 2020, 1.74 million bpd went through the Suez Canal, according to tanker tracking firm Kpler. Additionally, 1.54 million bpd of refined oil products such as gasoline…

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