DTN Oil
WTI, Brent Futures Gain on GOM, Norway Supply Shut-ins
WASHINGTON(DTN) -- Following an explosive rally at the start of the week, nearby delivery oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange continued higher in early trade Tuesday, spurred by weakness in the U.S. dollar and potential supply disruptions to offshore production in the Gulf of Mexico as Tropical Storm Delta is now expected to strengthen into a Category 2 hurricane when it makes landfall along the Texas-Louisiana coastline later this week while a worker's strike cuts output in the North Sea.
U.S. President Donald Trump's quick discharge from the Walter Reed Medical Center late Monday following three days of treatment for the coronavirus infection fuels risk-on trade sentiment, with the White House physician saying the president is "up and back to his old self."
Investors remained focus on stimulus talks in Washington, D.C., between the House and Trump administration after both parties signaled willingness to reach an agreement following slowing job growth in September. The U.S. economy added a less-than-expected 661,000 jobs in September, with the trend expected to continue into the fourth quarter as major employers including airlines, theme parks and movie theaters announce layoffs amid lost business due to the pandemic and fading fiscal support from the federal government.
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U.S. equity futures slipped early Tuesday ahead of Federal Reserve Chairman Jerome Powell's speech to the National Association for Business Economics set to begin at 10:40 a.m. ET. Markets will watch for Fed chief's comments on the latest outlook for economic recovery and prospects for fiscal stimulus in light of large-scale layoff and slowdown in new hiring.
Separately, Tropical Storm Delta is now strengthening off the Gulf of Mexico and is expected to make landfall along the Louisiana-Florida coastline in a Category 2 Hurricane on Friday, according to the DTN WeatherOps. Offshore Gulf of Mexico oil and gas producers BP, BHP Group and Occidental Petroleum have begun removing staff and securing offshore facilities. Royal Dutch Shell and Murphy Oil Corp said they were monitoring the storm.
Internationally, six oil and gas fields offshore Norway in the North Sea have been shut-in this week due to union strikes. So far, total output loss totals 330,000 barrel per day (bpd) of oil equivalent. An expanded worker's strike would threaten as much as 22% of Norway's production capacity, according to Norway's Oil & Gas Association, which would be equivalent to 900,000 bpd.
In early trading, November West Texas Intermediate futures added 65 cents to trade just below $40 per barrel (bbl) after surging as much as 6% the prior session, and the December Brent contract advanced 72 cents to $42 bbl. November ULSD futures were up 2.3 cents to near $1.1565 gallon and November RBOB futures extended 2.8 cents higher to trade near $1.2220 gallon.
U.S. Dollar Index softened against a basket of foreign currencies to trade near 93.435, lending support for WTI futures.
Liubov Georges can be reached at liubov.georges@dtn.com
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