Oil rose above $ 43 a barrel on Thursday, supported by output shutdowns in the U.S. Gulf of Mexico and the prospect of more supply losses in Norway, as well as by hopes for some U.S. coronavirus relief aid.
Oil and gas workers have withdrawn from offshore U.S. Gulf production facilities as Hurricane Delta was forecast to intensify into a powerful, Category 3 storm. Nearly 1.5 million barrels of daily output was halted.
Brent crude was up $ 1.16, or 2.8%, to $ 43.15 a barrel at 1338 GMT, after falling 1.6% on Wednesday. U.S. West Texas Intermediate (WTI) crude added $ 1.12, or 2.8%, to $ 41.07 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 Bjornar 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 Oct. 14.
The production losses offset concerns about demand, rising coronavirus cases and rising U.S. crude inventories.
Renewed optimism over some U.S. coronavirus relief aid also supported the market.
After shutting down talks over a larger stimulus deal, President Donald Trump wrote on Twitter Congress should pass money for airlines, small businesses and stimulus cheques for individuals, fuelling 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 the Organization of the Petroleum Exporting Countries helped boost prices.
OPEC now faces a new challenge from rising output in Libya, an OPEC member exempted from cutting output.
On Thursday, OPEC Secretary General Mohammad Barkindo said the worst was over for the oil market.