Adedapo Adesanya
By Adedapo Adesanya
Prices of major crude benchmarks surged more than 5 per cent on Monday on a string of bullish news led by the news that US President, Mr Donald Trump, could soon be discharged from the hospital where he is being treated for COVID-19.
Brent crude futures rose by $2.18 or 5.55 per cent to $41.45 per barrel while the US West Texas Intermediate (WTI) crude futures gained $2.17 or 5.86 per cent to trade at $39.22 per barrel.
Last Friday, prices slumped more than 4 per cent following Mr Trump’s diagnosis but his doctors have said he could be discharged soon which improved market sentiment.
Prices were also supported by strike action in Norway, which led to the shutting down of six offshore oil and gas fields on Monday, including four of Equinor’s. More oil and gas field shutdowns are possible in Norway as the strike continues to escalate due to pay.
The strike, while painful for Norway, is a welcomed addition to the oil markets grappling with low demand and increasing supply out of Libya. Production has ramped up in Libya to almost double following a lifting of the months-long blockade.
In Libya, production is now thought to be near 300,000 barrels per day. The strike in Norway is estimated to have taken offline 330,000 barrels per day, more than offsetting any gains in Libya.
Hopes for a stimulus package in the United States to counter the economic impacts of the pandemic also supported prices. White House Chief of Staff, Mr Mark Meadows, said there was still potential to reach an agreement with lawmakers on more economic relief during the coronavirus pandemic.
Still in the US, the focus is shifting to storms as the Tropical Storm Delta is forecast to become a hurricane in the Gulf of Mexico later this week.
Its winds could reach 105 miles (169 kilometres) per hour as it crosses the Gulf, making it a Category 2 storm on the five-step Saffir-Simpson scale, the US National Hurricane Center said Monday.
Market analysts expect this gain to be short-lived as prices are still recovering amid worries that a resurgence of the pandemic in major economies may derail the fragile recovery in oil demand. Reopening plans across the world are now being questioned with additional countries debating a return to full lockdown.
