Oil futures rose Tuesday, building on the previous session’s sharp gains as investors focused on a strike that’s curtailed Norwegian output and braced for Hurricane Delta, which could potentially make landfall on the U.S. Gulf Coast later this week.
West Texas Intermediate crude for November delivery rose 76 cents, or 1.9%, to $39.98 a barrel on the New York Mercantile Exchange, while December Brent crude gained 77 cents, or 1.9%, at $42.06 a barrel on ICE Futures Europe.
Optimism over prospects for another round of fiscal stimulus out of Washington was credited with boosting WTI by nearly 6% and Brent by 5.1% on Monday, alongside concerns over a strike that has idled output in six Norwegian oil fields responsible for around 330,000 barrels a day of oil-equivalent production.
“Prices are currently suffering from following the bouncing stimulus ball syndrome, which temporarily papers over the real tragedy unfolding in the oil patch, specifically a lengthy beatdown and tenuous recovery from this nasty epidemic,” said Stephen Innes, chief global market strategist at Axi, in a note.
U.S. House Speaker Nancy Pelosi, D-California, told Democratic congressional leaders late Monday that stimulus talks with U.S. Treasury Secretary Steven Mnuchin were going “very slowly,” Politico reported. Pelosi and Mnuchin are scheduled to speak again Tuesday, the report said.
Meanwhile, Hurricane Delta strengthened into a Category 2 storm early Tuesday and threatened to make landfall in the Gulf Coast later this week.
Supply data will be in focus later Tuesday. The American Petroleum Institute, an industry trade group, is expected to deliver its weekly look at U.S. crude and product inventories after the market close. The Energy Information Administration’s more closely watched inventory figures are set for release on Wednesday morning.
Analysts surveyed by S&P Global Platts, on average, forecast crude stocks to have fallen by 2 million barrels last week, while gasoline inventories are seen down 800,000 barrels and distillate stocks are expected to drop 2.9 million barrels.