Oil futures climbed by more than 5% on Monday as President Donald Trump’s condition appeared to improve following treatment for COVID-19, traders weighed prospects for another round of stimulus in the U.S. and monitored a strike that is curtailing crude output in Norway.
Oil’s rise is “tied into broader market strength,” with prices up after posting a losses in the latter half of last week and U.S. equity benchmarks strengthening after selling off on Friday, said Robbie Fraser, senior commodity analyst at Schneider Electric.
“The back-and-forth move is at least partially connected to President Trump’s health; the uncertainty created by his COVID-19 diagnosis triggered losses on Friday, while suggestions that he could seen be cleared to leave Walter Reed hospital have brought support” in Monday dealings, said Fraser, in a note.
West Texas Intermediate crude for November delivery climbed $2.08, or 5.6%, to $39.13 a barrel on the New York Mercantile Exchange, while December Brent crude, the global benchmark, advanced $2.03, or 5.2%, to $41.30 a barrel on ICE Futures Europe. WTI dropped nearly 8% last week, while Brent fell more than 7%.
Trump remains hospitalized at Walter Reed Medical Center after being diagnosed with COVID-19 late last week. Doctors and White House staff offered conflicting accounts of the president’s condition over the weekend. Doctors on Sunday, however, said it was possible Trump could be discharged as early as Monday.
Diminished fears of political turmoil around Trump’s health and ideas that prospects for another round of aid spending out of Washington are improving were credited with improving overall market sentiment, analysts said.
Meanwhile, Norwegian oil-and-gas major Equinor ASA said Monday that four fields in the North Sea have been shut down due to a strike. That brings the total number of fields affected by the strike to six, which, according to the Norwegian Oil and Gas Association could see as much as 330,000 barrels of oil equivalent lost per day, That’s equal to around 8% of Norway’s oil and gas production, according to Commerzbank.
But Carsten Fritsch, commodity analyst at Commerzbank, said the strike in Norway on its own wouldn’t justify a sustained rally in prices.
“During the last strike in June 2019, Norwegian oil production fell by a monthly average of around 200,000 barrels per day but recovered quickly afterwards,” Fritsch wrote. “In the current environment, every barrel of crude oil fewer that Norway produces could actually be welcome, even if it is only temporary.”
Fritsch noted that oil output in Libya is rising at the same time, hitting 270,000 barrels a day at the end of last week.
Back on Nymex, prices for petroleum products were up sharply, with November gasoline tacking on 6.6% to $1.1976 a gallon and November heating oil up 4.5% at $1.1339 a gallon.
November natural gas traded at $2.643 per million British thermal units, up 8.4%.
Another storm threatened to disrupt energy production in the Gulf of Mexico, with Tropical Storm Delta forecast to move into the southeastern Gulf of Mexico Tuesday night or early Wednesday, according to the National Hurricane Center. Delta follows energy disruptions caused by Hurricane Sally last month.