Oil drops in volatile week while Suez Canal mishap persists

Oil slid amid broader market weakness after two wild sessions that saw prices whipsaw around 6% in both directions, while traders continued to monitor a container ship that’s blocking the Suez Canal.

Futures fell as much as 4.1% in New York on Thursday in the wake of declining equities and a stronger US dollar, which reduces the appeal of commodities priced in the currency. Meanwhile, work to re-float the massive ship that’s stuck in the canal — a key trade route for crude flows — continued without success on Thursday in Egypt.

“The move lower in crude oil prices is being driven by a slowdown in commodity index inflows, a stronger US dollar and weaker global equity markets,” said Ryan Fitzmaurice, commodities strategist at Rabobank. “Modestly lower crude oil prices” will likely persist in the near-term ahead of a seasonal demand pick-up.