By Barani Krishnan
Investing.com - Supply disruptions from the evolving Hurricane Delta and a brief Norwegian oil strike gave crude prices a near double-digit weekly gain, propping the market back in the green lane after two weeks in the red.
The outlook for oil, however, remains suspect in the near term given the typically slower demand period in the fall season, analysts said.
With the Norwegian Oil and Gas Association and industry union Lederne reportedly reaching an agreement Friday, market bulls may need to find a bigger price catalyst in the week ahead, they added.
While President Donald Trump pushed Congress for a large new COVID-19 stimulus on Friday that marked a complete U-turn from the talks he ordered canceled earlier in the week, concerns about the growing pandemic in the U.S. and elsewhere still weighed on the market, said analysts.
The other uncertainty hanging over oil: the outcome of the November 3 U.S. election where Republican President Trump faces a Democrat candidate Joe Biden.
“Positioning from CTAs in the market is very short currently and additional macro shorts may have added some support into a market as it's pretty clear that the pain trade was/is up as COVID is worsening,” said Scott Shelton, energy futures broker at ICAP (LON: NXGN ) in Durham, North Carolina.
“The U.S. elections are turning into a carnival and quite frankly, the oil fundamentals look pretty dire.”
New York-traded West Texas Intermediate , the key indicator for U.S. crude prices, settled at $40.60 per barrel, down 59 cents, or 1.4%, on the day. For the week, WTI rose $3.55 or 9.5%.
London-traded Brent crude, the global benchmark for oil, settled down 49 cents, or 1.1%, at $42.85. For the week, Brent was up 9.1%.
President Trump told a radio show on Friday that he wants a new and bigger coronavirus relief approved for the American people than what was negotiated previously in Congress, an apparent U-turn from just days ago when he ordered such talks canceled.
Earlier this week, Trump shocked the nation and caused the stock market to plunge by announcing that he was terminating negotiations for a new COVID-19 stimulus. The president blamed House Speaker and leader of the Democrats in Congress Nancy Pelosi for the aborted talks, saying she demanded an outsized $2.4 trillion package versus the $1.6 trillion offered by the Republicans. Pelosi didn’t respond directly to the accusation and questioned instead the mental capacity of the president, who was still on drugs for his COVID-19 treatment.
The stimulus talks appeared back on track Friday after White House Economic Adviser Larry Kudlow told Fox Business that Trump had approved a revised package to negotiate with Democrats. The Wall Street Journal later reported that the White House was working on an $1.8b trillion package, citing people familiar with the discussions.
After closing the first four days of the week in the positive territory and reaching its highest level in more than a month at $41.44, the barrel of West Texas Intermediate (WTI) turned south on Friday. As of writing, the WTI was down 1.75% on a daily basis at $40.50.
On the Norwegian front, Reuters reported on Friday that the country’s oil producers and labor union officials have agreed to end the strike that had brought output down nearly 25% this week.
Still, oil closed off the day’s lows after government showed that nearly 92% of oil production facilities and almost 62% of gas output capability in the U.S. Gulf Coast of Mexico had been shut ahead of Hurricane Delta.
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