London — Oil rose above $42 a barrel on Thursday, supported by output shutdowns in the US Gulf of Mexico and the prospect of more supply losses in Norway, as well as by hopes for some US coronavirus relief aid.
Oil and gas workers have withdrawn from offshore US Gulf production facilities as Hurricane Delta is forecast to intensify into a powerful, category 3 storm. Nearly 1.5-million barrels of daily output has been halted.
Brent crude rose 67c, or 1.6%, to $42.66 a barrel by 10.44am GMT, after falling 1.6% on Wednesday. US West Texas Intermediate (WTI) crude added 52c, or 1.3%, to $40.47 after falling 1.8% on Wednesday.
“The market is welcoming supply cuts as the world is currently producing more oil than it can consume,” said Bjørnar Tonhaugen of Rystad Energy. “Since most of the price boost is weather- and strike-related today, it may not be here to stay.”
Oil also gained support from the prospect of more production outages in the North Sea because of a workers’ strike. The major Johan Sverdrup field will have to shut unless the strike ends by October 14.
The production losses offset concerns about demand, rising coronavirus cases and rising US crude inventories.
Renewed optimism over some US coronavirus relief aid also supported the market.
After shutting down talks over a larger stimulus deal, US President Donald Trump wrote on Twitter that Congress should pass money for airlines, small businesses and stimulus cheques for individuals, fueling hopes for some relief.
Oil collapsed in April due to the coronavirus crisis, with Brent falling to a 21-year low below $16. A production cut led by oil cartel Opec helped boost prices.
Opec now faces a new challenge from rising output in Libya, an Opec member exempted from cutting output.