Crude prices levelled off on Friday to finish the week above $50 for the first time this year. April delivery contracts closed at $51.06, up 14% from the start of the year.
Despite the week’s major OPEC announcement, the day saw trading slide 55 cents, but a late rally came from an unexpected source.
A US Navy submarine and US amphibious ship collided in the sensitive Strait of Hormuz on Friday. The collision between USS Hartford and USS New Orleans occurred at approximately 1:00 a.m. local time (5:00 p.m. EDT, March 19).
The US Navy’s fifth fleet spokesman said fifteen sailors aboard the Los Angeles Class nuclear attack submarine Hartford were slightly injured and returned to duty. No personnel aboard New Orleans were injured.
The propulsion plant of the submarine was unaffected by the collision, and despite the innocuous nature of the relatively minor incident, which did not block the waterway, traders were sufficiently spooked to keep the price above $51.
New Orleans suffered a ruptured fuel tank, which resulted in an oil spill of approximately 25,000 gallons of diesel fuel marine. Both ships are currently operating under their own power.
Ironically both vessels are deployed with the remit to maintain stability in the maritime environment, as well as complement the counter-terrorism and security efforts of regional nations.
Oil prices rose 11% last week. Prices took their biggest leap of the year in the wake of US Federal Reserve plan announcements to buy over a trillion dollars of government bonds and mortgage-backed securities.
OPEC ruled out further production cuts last Sunday, but urged greater compliance with the output benchmarks put in place. The announcement appears sufficient to stabilise markets, and oil continued its overall upward march, rising for five consecutive weeks.
OPEC has reduced daily output targets by 4.2 million barrels since September to prevent a supply glut, however, US crude stocks rose again, to over 353 million barrels, and fuel consumption in that market dropped again last week.
Oil is likely to maintain its position, although a slight dip below the psychologically important $50 barrier remains on the cards. April delivery contracts closed on Friday, and Bloomberg reports the May delivery contracts closed last week at $52.07.
Â
