OIL FUTURES: Dashed US stimulus hopes halt rally fueled by Delta shut-ins

New York — Oil prices settled higher Oct. 6, but were trending downward in aftermarket trading Oct. 6 after US President Donald Trump appeared to halt stimulus bill negotiations until after the November elections.

NYMEX November WTI settled $1.45 higher at $40.67/b and ICE December Brent climbed $1.36 to settle at $42.65/b.

"I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business," Trump tweeted.

The comments halted a late-session rally fueled by tightened supply outlooks, and front-month futures prices pulled back around 50 cents/b in the immediate wake of Trump's tweet. At 1930 GMT, November WTI was up 92 cents at $40.14/b and December Brent was 91 cents higher at $42.20/b.

"It really turned the market around," Price Futures Group senior market analyst Phil Flynn said of the Trump tweet. "We were kind of expecting they would get something done before the election, but it's not looking good."

NYMEX November RBOB settled up 4.10 cents at $1.2351/gal and November USLD was up 5.53 cents on the day at $1.1886/gal.

Trump's statement comes just hours after US Federal Reserve Chairman Jerome Powell, speaking at the National Association for Business Economics on Oct. 6, called for increased federal stimulus spending to support economic recovery.

"Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses," Powell said, according to media reports.

Still, oil gleaned support from tightened supply outlooks as US Gulf of Mexico offshore oil and gas producers continued evacuating crews and shutting in wells on Oct. 6 as Hurricane Delta strengthened into a major Category 4 hurricane en route to a projected Louisiana landfall this weekend.

Chevron, Equinor, BHP, and BP have announced plans to evacuated platforms ahead of the storm. As of midday Oct 6, 5440,495 b/d of oil production, representing 29.22% of the Gulf's total output, was offline, according to US Bureau of Safety and Environmental Enforcement data.

In the North Sea, six Norwegian oil and gas fields have been shut down, taking up to 330,000 b/d of oil equivalent or 8% of Norway's total oil and gas output offline, according to the Norwegian Oil and Gas Association, following the escalation of a strike by offshore workers.

Meanwhile, US crude oil inventories are expected to have declined 2 million barrels in the week ended October 2 to around 490.4 million barrels, according to analysts surveyed by S&P Global Platts Oct. 5. A closely watched American Petroleum Institute inventory report is slated for release later Oct. 6.