Oil rose above $42 a barrel on Thursday, supported by output shutdowns in the U.S. Gulf of Mexico and the prospect of more supply losses in Norway, as well as by hopes for some U.S. coronavirus relief aid.
Oil and gas workers have withdrawn from offshore U.S. Gulf production facilities as Hurricane Delta was forecast to intensify into a powerful, Category 3 storm. Nearly 1.5 million barrels of daily output was halted.
Brent crude LCOc1 rose 59 cents, or 1.4%, to $42.58 a barrel by 0812 GMT, after falling 1.6% on Wednesday. U.S. West Texas Intermediate (WTI) crude CLc1 added 45 cents, or 1.1%, to $40.40 after falling 1.8% on Wednesday.
“If Delta stays weak, the oil rally could quickly run out of steam,” said Jeffrey Halley, analyst at brokerage OANDA.
Oil also gained support from the prospect of more production outages in the North Sea because of a workers’ strike. The Johan Sverdrup field, the North Sea’s largest, will have to shut production unless the strike ends by Oct. 14.
The production losses offset concerns about weak demand, rising coronavirus cases and an increase in U.S. crude inventories as reported by the Energy Information Administration. [EIA/S]
Renewed optimism over some U.S. coronavirus relief aid also supported the market.
After shutting down talks over a larger stimulus deal, President Donald Trump wrote on Twitter Congress should pass money for airlines, small businesses and stimulus cheques for individuals, fuelling hopes for some relief.
Oil collapsed to historic lows in April due to the coronavirus crisis, with Brent falling to a 21-year low below $16. A production cut led by the Organization of the Petroleum Exporting Countries helped boost prices.
OPEC now faces a new challenge from rising output in Libya, an OPEC member exempted from cutting output.