(Bloomberg) -- Oil retreated as traders monitored efforts to dislodge a massive ship blocking the Suez Canal, after two wild days that saw prices whipsaw around 6% in both directions.

Futures in New York slid 1.6%, the latest sizable move this week. Work to re-float the container ship that’s stuck in the canal -- a key trade route for crude flows -- was expected to begin early Thursday in Egypt. The best chance of freeing the vessel may not come until Sunday or Monday.

The bounce in oil following the canal incident gave the market a much needed breather after a series of factors including softening demand combined to drive prices to a six-week low on Tuesday. U.S. crude stockpiles, meanwhile, have continued to climb, although domestic fuel consumption has expanded.

Despite the recent selloff, oil is still up more than 20% this year and there is confidence in the longer-term outlook for demand as coronavirus vaccinations accelerate worldwide while OPEC+ output cuts tighten supply. The alliance is scheduled to meet next week to decide production policy for May in a gathering that will be keenly watched by the market.

“It all got a bit too excited earlier with talk about supercycles and massive stockdraws in the first quarter,” said Paul Horsnell, head of commodities research at Standard Chartered. That was “never on the cards, the big stock draws come later.”

Prices

West Texas Intermediate fell 98 cents to $60.20 a barrel at 10:10 a.m. London time after surging 5.9% on Wednesday, the most since November
Brent for May settlement slipped 1.3% to $63.55

The prompt timespread for Brent flipped back into a bullish backwardation on Wednesday after ending in a bearish contango in the previous session for the first time since January. It was 17 cents in backwardation on Thursday, compared with 67 cents at the start of the month.

Tugs and diggers have so far failed to dislodge the container ship in the Suez Canal, which has led to a gridlock of vessels waiting to pass. The spring tide on Sunday or Monday will add extra depth and allow for more maneuvering, said Nick Sloane, the salvage master responsible for refloating the Costa Concordia.

Other oil-market news:

It’s taken a maritime crisis to offer hard-hit oil tanker owners an unexpected reprieve, although the relief is expected to be short-lived.
Explorers in the U.S. shale patch are starting to see signs of higher costs as drilling begins to ramp up after last year’s historic crude crash, according to the latest poll conducted by the Federal Reserve Bank of Dallas.
OPEC+ is likely to maintain output targets for another month when it meets next week given the recent weakness in oil prices, according to industry consultant FGE.

--With assistance from Rob Verdonck.

Oil Retreats After Surge with Volatility Rising

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