Oil surged to over $ 42 a barrel on Thursday, backed by U.S. production cuts in the Gulf of Mexico, the possibility of further supply losses due to the strike in Norway, and hopes of U.S. coronavirus aid incentives.
Oil and gas workers on the US Gulf coast withdrew from production facilities, fearing the Delta would turn into a powerful Category 3 hurricane. Approximately 1.5 million barrels of production per day was stopped. The oil rally may be exhausted quickly if Delta performs light.
Brent crude LCOc1 rose 59 cents, or 1.4%, to $42.58 a barrel by 0812 GMT, after falling 1.6% on Wednesday. West Texas Intermediate (WTI) crude CLc1 added 45 cents, or 1.1%, to $40.40 after falling 1.8% on Wednesday.
It compensated for concerns about production losses, low demand, rising coronavirus cases and an increase in U.S. crude oil stocks. Renewed optimism regarding the US coronavirus aid incentive also supported the market.
After the President stopped talks about incentives, she wrote on Twitter that Congress should transfer money in terms of incentives for airlines, small businesses and individuals, which has raised hopes.
Meanwhile, OPEC faces a new challenge arising from increased production in Libya, which is exempted from production cuts.