OIL FUTURES: Oil climbs as US, Norway production woes threaten supply outlook

New York — Oil prices settled higher Oct 8. as lowered crude production in the Gulf of Mexico and Norway tightened near-term supply outlooks.

NYMEX November WTI settled $1.24 higher at $41.19/b and ICE December Brent was up $1.35 at $43.34/b.

"It's all about supply disruptions. The Gulf of Mexico is dominating headlines but also the strike in Norway threatening about 25% of their oil and gas output," OANADA senior market analyst Edward Moya said. That's providing a big hit here for non-OPEC production."

Around 91.53% or 1.693 million b/d of Gulf of Mexico crude production has been shut in ahead of Hurricane Delta, according to US Bureau of Safety and Environmental Enforcement data Oct. 8.

Delta is forecast to strengthen into a major Category 3 hurricane and then weaken back into a still-powerful Category 2 storm before an Oct. 9 landfall in southwestern Louisiana, not far from where Laura devastated the region in late August.

Crude exports from Louisiana are feeling the impact as well. A LOOP spokesperson said Oct. 7 that the offshore port's marine terminal has suspended operations in advance of the storm.

Meanwhile, Norway's oil and gas output could be reduced by 966,000 b/d of oil equivalent, or nearly a quarter, with the flagship Johan Sverdrup among fields affected if the Lederne union goes ahead with a planned strike escalation, industry group Norwegian Oil & Gas said Oct. 8.

The strike, which began Oct. 5, has currently shut in approximately 330,000 boe/d of oil and gas output, representing 8% of the county's total output.

NYMEX November RBOB settled 3.07 cents higher at $1.2316/gal and November ULSD climbed 3.15 cents to settle at $1.1923/gal.

Saudi Arabia, citing demand risks due to rising global coronavirus cases, is considering cancelling plans to boost OPEC+ production quotas after December, the Wall Street journal reported Oct. 8.

"The demand outlook has been dwindling, so it's not really surprising." Moya said. "It is positive that OPEC+ is paying attention to markets and not going to bring back oversupply concerns anytime soon."

Oil prices momentarily jumped on the report, but the uptick was later subsumed by a general upward market trend.

The OPEC+ coalition in August rolled back its historic 9.7 million b/d production cut accord to 7.7 million b/d and is scheduled to relax it further to 5.8 million b/d at the start of 2021.

The nine-country Joint Ministerial Monitoring Committee, which is tasked with monitoring market conditions and recommending any changes to the OPEC+ deal, is next due to meet online Oct. 19.