MABUX: Bunker Market this morning, 6 October, 2020
Oil jump 5% on Trump health update, Norway shutdowns.
Oil prices climbed more than 5% on Monday after U.S. President Donald Trump said he will leave the hospital where he is being treated for COVID-19, while six Norwegian offshore oil and gas fields were shut as more workers joined a strike.
Brent rose $2.02, or 5.1%, to settle at $41.29 a barrel. U.S. West Texas Intermediate (WTI) crude rose $2.17, or 5.9%, to settle at $39.22 a barrel.
“A lot of people thought last week’s sell-off was overdone,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “There were a lot of assumptions.”
On Friday, prices slumped more than 4% following the news that Trump had tested positive for the coronavirus. On Monday, Trump said he will leave the military hospital where he was being treated later in the day, adding that he felt “really good.”
A wave of infections has hit his White House four weeks before the U.S. election.
Hopes for a U.S. stimulus package to counter the economic impacts of the pandemic also supported prices. U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin spoke by phone for about an hour on Monday and were preparing to talk again on Tuesday.
Oil was also supported by the escalating workers’ strike in Norway over pay. Six Norwegian offshore oil and gas fields were shut.
The strike will cut Norway’s total output capacity by just over 330,000 barrels of oil equivalent per day, or about 8% of total production, according to the Norwegian Oil and Gas Association (NOG).
“This will not entail any serious tightening of supply on the market as concerns about demand and fears of a renewed oversupply predominate at present,” said Commerzbank analyst Carsten Fritsch.
The reduction in Norwegian production was mainly balanced by rising output in Libya, analysts said.
Libyan oil production has increased to 290,000 barrels per day, a source told Reuters on Monday, almost three times more than its output during a blockade that began in January and ended in September.
Energy companies on Monday began evacuating offshore oil platforms as the 25th named storm of the year formed in the Caribbean and was forecast to move into the Gulf of Mexico and threaten the Gulf Coast this week.
Market today Tuesday morning
Oil holds gains after Trump’s return to the White House.
Oil prices edged higher in early trade on Tuesday after U.S. President Donald Trump returned to the White House from hospital after being admitted for treatment for COVID-19 last Friday, while another storm brewed in the U.S. Gulf of Mexico.
An expanding strike by workers in Norway, which shut six offshore oil and gas fields, and the evacuation of oil platforms in the U.S. Gulf of Mexico ahead of Tropical Storm Delta heading toward Louisiana and Florida also helped support prices.
“It’s the supply-side factors that have changed in the last 24 hours and are contributing more to the uplift,” said Lachlan Shaw, head of commodity research at National Australia Bank.
The Norway strike will cut the country’s total output capacity by just over 330,000 barrels of oil equivalent per day, or about 8% of total production, according to the Norwegian Oil and Gas Association.
Meanwhile hopes for a bipartisan U.S. economic relief package grew as House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin spoke on Monday and prepared to talk again Tuesday.
“There’s better (fuel) demand sentiment surrounding the potential for U.S. fiscal agreement, and perhaps President Trump leaving hospital might drive a bit of impetus to conclude a deal there,” Shaw said.
Data from the American Petroleum Institute on Tuesday and the U.S. government on Wednesday will provide a picture of whether demand is picking up.
Oil Future close 5th October, 2020
Brent crude: $ 41.29 (+2.02) /brl FM delivery Dec (FM=Front Month)
Light crude (WTI): $ 39.22 (+2.17) /brl FM delivery Nov
Gasoil ARA; $ 329.00 (+14.25) /mton FM delivery Oct
NY Harbor Ulsd: $ 348.90 (+14.87) /mton FM delivery Nov
Oil Futures trading at GMT 05.37; Brent: $+0.14, WTI: $+0.13.
Expect bunker prices to rise in big numbers today, based Oil Future close last night. Fuel Oil all over up 12-15 usd/mton. MGO and NY Harbor Ulsd up in big numbers 14-15 usd/mton.