Oil prices surged 6% on Monday after doctors said U.S. President Donald Trump could soon be discharged from the hospital where he is being treated for COVID-19, while six Norwegian offshore oil and gas fields were shut as more workers joined a strike.
Brent LCOc1 was up rose $2.30, or 5.9%, to $41.57 a barrel by 1:09 p.m. EDT (1709 GMT). U.S. West Texas Intermediate (WTI) crude CLc1 rose $2.42, or 6.5%, to $39.47 a barrel.
“A lot of people thought last week’s selloff was overdone,” said Phil Flynn, senior analyst at Price Futures Group in Chicago. “There were a lot of assumptions.”
On Friday, prices slumped more than 4% following Trump’s diagnosis. Trump’s medical condition remained unclear as he began a fourth day at the military hospital where he is being treated, but his doctors have said he could be discharged as soon as Monday, which improved market sentiment.
Hopes for a U.S. stimulus package to counter the economic impacts of the pandemic also supported prices. White House Chief of Staff Mark Meadows said there was still potential to reach agreement with U.S. lawmakers on more economic relief during the coronavirus pandemic.
Oil was also supported by an escalating workers’ strike in Norway over pay. Six Norwegian offshore oil and gas fields were shut.
The strike will cut Norway’s total output capacity by just over 330,000 barrels of oil equivalent per day, or about 8% of total production, according to the Norwegian Oil and Gas Association (NOG).
“This will not entail any serious tightening of supply on the market as concerns about demand and fears of a renewed oversupply predominate at present,” said Commerzbank analyst Carsten Fritsch.
The reduction in Norwegian production was mainly balanced by rising output in Libya, analysts said.
Libyan oil production has increased to 290,000 barrels per day, a source told Reuters on Monday, almost three times more than its output during a blockade that began in January and ended in September. (REUTERS)