By Ann Koh and Alex Longley

Oct 8, 2020

(Bloomberg) Oil rose beyond $40 a barrel in New York, buoyed by supply disruption in the U.S. and the threat of a slump in Norwegian output. Energy operators in the Gulf of Mexico have shut 80% of oil output in preparation for Hurricane Delta, which barreled across the Yucatan Peninsula and is poised to hit the Louisiana coast on Friday. There was potential for further output losses in Norway, where a strike could close almost almost a quarter of the nation’s output next week.Stock markets also edged higher on Thursday on hopes that American lawmakers will reach a stimulus deal.

Crude has struggled to move too far away from $40 a barrel since June

Oil remains tied to the $40 marker as the conflicted forces of American stimulus measures and flagging demand keep prices in check. There’s also the question of OPEC+’s next move, with Vitol Group expecting the organization to change course on plans to relax output cuts in January. For now though, focus remains on one of the most active hurricane seasons in recent memory.

“Hurricane Delta has supported the latest recovery” in prices, said Ole Hansen, head of commodities strategy at Saxo Bank. “Renewed stimulus hopes have generally given assets a risk-on boost.”

ROO.AI Oil and Gas Field Service Software

Prices
West Texas Intermediate for November delivery added 1.9% to $40.69 a barrel as of 8:34 a.m. New York time Brent for December settlement gained 1.9% to $42.80

Traders are also looking for indications of Mexico’s secretive annual oil hedge. Many suspect that sharp declines in prices late last week were tied to the deal, though there hasn’t been the usual sign of activity in oil options markets.

Hurricane Delta has not only spurred operators to shut in production, but is also threatening to further depress crude demand from refiners that may face disruptions. Phillips 66 has paused the restart of its Lake Charles plant in southwest Louisiana as Delta heads for the state.

“All told we are working at a very low demand level with massive refining capacity and huge inventory surpluses everywhere you care to look,” Jan Stuart, global energy economist at Cornerstone Macro, said in a Bloomberg TV interview. “That’s just not a good level for oil prices recovering to a deployable level.”

Other oil-market news:
OPEC expects to emerge from the pandemic with a greater share of global oil sales, after 2020’s price downturn battered rivals in the U.S. and elsewhere. Traffic on toll roads in Italy, Spain and France fell again last week, according to data from motorway infrastructure company Atlantia.