DTN Oil

WASHINGTON (DTN) -- Heading into the weekend, nearby delivery oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange shifted lower on Friday as traders looked past shut-in oil production in the U.S. Gulf of Mexico after Hurricane Delta weakened to a Category 2 storm ahead of landfall along the Texas-Louisiana coastline Friday night while labor unions in Norway reached a wage agreement that has reportedly ended a 2-week strike.

Norway's strike could have potentially disrupted up to 25% or 968,000 barrels per day (bpd) of the country's crude output, with the Johan Sverdrup oil field with capacity of 485,000 bpd scheduled for temporary closure on Oct. 14 if the strike extended into next week. Reuters reported Friday labor unions and oil companies reached a deal that allowed for all shut-in oil fields in Norway to resume production.

In the U.S. market, Hurricane Delta weakened to Category 2 intensity Friday afternoon as it moved closer to the Louisiana-Texas coastline, forcing some 92% or 1,963,232 bpd of current output in the Gulf of Mexico offline. Fifteen dynamically positioned rigs in the hurricane's projected path have been moved off locations as a precaution. Typically, producers in the offshore Gulf of Mexico are quick to resume production following a hurricane absent sustained damages to the infrastructure.

Further weighing on prices, U.S. oil rig count increased for the third straight week, up four during the week ended Friday and 14 higher during the last three weeks; that pushed the total number of oil rigs to a 193 4-month high, according to Baker Hughes.

On the session, November West Texas Intermediate futures fell 59 cents to settle at $40.60 and ICE December Brent contract eased 49 cents to $42.85 bbl, retreating from a 5-week high settlement on the spot continuous chart. NYMEX November ULSD futures settled little changed at $1.1933 gallon and November RBOB futures dropped back 2.84 cents or 2.4% to $1.2032 gallon.

A weakening U.S. dollar, which fell 0.63% to a better than 3-week low of 93.065 in index trade against a basket of global currencies in afternoon trade Friday limited the decline in WTI futures.

In broader markets, investors continue to monitor developments around stimulus talks in Washington, with President Donald Trump proposing a $1.8 trillion package. White House Economic Adviser Larry Kudlow told Fox Business, "The president has approved a revised package. He would like to do a deal. It will be relatively broad based but I can't go through details."

Liubov Georges can be reached at liubov.georges@dtn.com

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