Oil prices set for biggest weekly gain since June

Hurricane Delta and Norway outages weigh on output

Hurricane Delta has forced energy companies to evacuate staff from offshore and onshore facilities, with operators in the Gulf of Mexico shutting 1.7 million barrels a day of oil output. AFP

Oil is poised for the biggest weekly gain since June with Hurricane Delta forcing the shutdown of almost 92 per cent of crude output in the Gulf of Mexico.

Delta regained strength to become a major hurricane and is forecast to slam into the already battered Louisiana coast later on Friday. While that has helped drive crude futures in New York 10 per cent higher this week, they slipped on Friday as Norwegian oil workers were set for mediation talks to avoid a strike that threatens 1 million barrels a day of oil and gas output.

Oil is back above $40 a barrel, with most of the gains coming earlier in the week after President Donald Trump left hospital following his treatment for Covid-19.

Initial optimism over a US stimulus package also boosted prices, but there’s doubt about a deal. Further upside, however, may be limited as a resurgence in virus infections crimps demand, while Opec+ and Libya add more supply to an already glutted market.

Oil is “today a bit lower on profit taking” after rallying in recent days, said Hans van Cleef, senior energy economist at ABN Amro. “With Republicans and Democrats not able to come to an agreement regarding a stimulus package, the sentiment may deteriorate once again.”

In a sign that the market may be growing more confident that the strike in Norway can be resolved, Brent’s nearest timespread slumped on Friday. The spread had strengthened in recent days as the walkout threatened to expand, but those concerns are now easing.

Hurricane Delta has strengthened to a Category 3 storm. Energy companies have evacuated staff from offshore and onshore facilities, with operators in the Gulf of Mexico shutting 1.7 million barrels a day of oil output.