(Bloomberg) — Crude prices slid after oil workers in Norway called off a strike that had shut down about 8% of the country’s production.
Futures in London and New York both fell over 1% on Friday. The settlement will restore production at six fields already shut down by the dispute and prevent an escalation to another six. It also averts the shutdown of Norway’s largest oil field, the 460,000 barrel-a-day Johan Sverdrup facility.
Still, Brent futures posted the largest weekly gain since early June and U.S. benchmark crude futures also advanced this week on supply disruptions from Hurricane Delta and optimism on a U.S. stimulus deal.
“If the strike lasted into next week or even beyond, that would mean a significant additional amount of platforms and fields that were impacted by the strike,” Gary Cunningham, a director at Tradition Energy. “Now that it’s resolved, not only are the incremental curtailments not going to happen, but now the original production is going to come back online.”
Futures were boosted this week amid President Donald Trump’s departure from the hospital following treatment for Covid-19 and mounting enthusiasm over a U.S. virus aid package, which would help spur a demand recovery. The coronavirus pandemic has been forcing governments worldwide to rethink reopening plans: Spain’s government has declared a state of emergency for the Madrid region and in the U.S., Texas virus hospitalizations jumped to a four-week high.
Meanwhile, Treasury Secretary Steven Mnuchin headed into talks with House Speaker Nancy Pelosi on Friday, carrying a White House offer of $1.8 trillion for economic stimulus, according to people familiar with the matter. The two spoke for about 30 minutes and Mnuchin’s proposal “attempted to address some of the concerns Democrats have,” Pelosi spokesman Drew Hammill said on Twitter.
“This is a very positive development,” said John Kilduff, a partner at Again Capital LLC. “The petroleum complex needs a stimulus package as badly as any of the other asset classes, maybe even more so. To the extent that this gets the economy sort of stabilized, or maybe revived, that portends well for demand going forward.”
- West Texas Intermediate for November delivery fell 59 cents to settle at $40.60 a barrel. The contract rose 9.6% this week.
- Brent for December settlement lost 49 cents to end the session at $42.85 a barrel. The benchmark posted a 9.1% weekly gain.
Meanwhile, Hurricane Delta has weakened to a Category 2 storm with winds of 110 miles (177 kilometers) per hour. Energy companies have evacuated staff from offshore and onshore facilities. Currently, 1.7 million barrels a day of oil output in the Gulf of Mexico shut in.
Other oil-market news:
- The cost for oil producers to lock in the price at which they sell their crude has soared because of the collapse in the aviation industry.
- The slump in worldwide oil demand may not end until 2023, according to drillers in the U.S. heartland.
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