Oil Tries To Settle Above $39 As Strike In Norway Provides Support To PricesOil is trying to settle above the $39 level.
Oil Video 05.10.20.
Strike Of Norwegian Offshore Workers Boosts Oil Prices
Oil is rebounding back towards the $40 level and is currently trying to settle above $39 as the strike of Norwegian offshore workers is set to put pressure on supply in the near term.
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According to estimates by Norwegian Oil and Gas Association, the strike will reduce the country’s oil production capacity by about 330,000 barrels of oil equivalent per day (boepd).
While the biggest Norwegian offshore workers’ union accepted the annual pay deal, a small union decided that pay proposals could have been better and went on strike.
It remains to be seen whether this strike will be long, especially in the current environment when the oil industry is hit by the consequences of the coronavirus pandemic.
Meanwhile, some reports indicate that Libya’s production continues to rise and has already reached 290,000 barrels per day (bpd). At this point, the increasing production from Libya will not be able to offset the negative impact of the strike in Norway.
However, the strike will ultimately end, and the market will have to deal with the increased Libyan production at a time when the continuation of demand recovery is uncertain as developed countries face the second wave of the virus. Meanwhile, the strike may put some pressure on inventory levels, which will be bullish for oil.
Trump’s Health Improves, Providing Support To Oil Prices
Recent reports indicate that U.S. President Donald Trump could get out of the hospital and return to White House as soon as today. These reports provided significant support to riskier assets, including U.S. stocks and oil.
The fear of a complete turmoil right before the U.S. presidential election was so strong that traders eagerly ignored the recent coronavirus-related news and focused on Trump’s improving health condition.
While Trump’s potential recovery would be a positive development for markets, oil traders will still have to face concerns about the slowdown of the oil demand recovery amid the introduction of new restrictive measures in various countries.
Perhaps, the oil market could get additional support from belief that any new measures will be loosely enforced. According to reports from Madrid, which has recently went under a new lockdown, few citizens noticed new checkpoints which were introduced to limit non-essential travel. However, oil traders will likely want to see additional data on this topic before betting on oil above the $40 level.
For a look at all of today’s economic events, check out our economic calendar.