Oil Makes Weekly Gains Despite End of Norway Strike

Meanwhile, Wells Fargo cites vaccine development as the reason for its bullish stance: File Image/PixaBay

For the first time in three weeks, crude benchmarks on Friday achieved weekly gains - of about 9 percent - based on earlier hopes for a breakthrough in another U.S. stimulus package, rumours that Saudi Arabia would make deeper output cuts, and both Hurricane Delta and a workers strike in Norway further curtailing crude production at a time of shaky demand.

However, the sudden end of the strike on Friday and the prospect of Norway resuming oil production resulted in daily losses for the benchmarks: Brent fell 49 cents to settle at $42.85 per barrel, while West Texas Intermediate fell 59 cents to settle at $40.60.

Phil Flynn, senior market analyst at Price Futures Group Inc., said, "One of the bullish factors that had been supporting prices fell apart late in the day when it was announced that Norway would end their strike."

The 10-day stoppage, which saw six offshore fields cease operations, had threatened to cut the country's oil and gas output by close to 25 percent next week.

Also on Friday, an upbeat Wells Fargo stated in a note that the recent uptick in markets compared to the pessimism of Covid obsessed analysts isn't due to U.S. president Donald Trump's chances for reelection or the stimulus package, but the emergence of treatments and vaccines for Covid-19.

"The market appears to be coming around to our bullish views on 'Covid betas','" the note said, referring to stocks predicted to jump on positive Corona virus news.

Meanwhile, David Fyfe, chief economist at Argus Media, on Friday speculated on what could happen to oil if Joe Biden becomes the next U.S. president: he theorized that Biden would reestablish relations with Iran, which in turn could bring 1 million barrels per day of Iranian oil back into the market and lead to lower demand.

However, Fyfe was cautiously optimistic about oil's steady recovery, assuming there is not a return to wide-sweeping lockdowns: "Gradually, the 1.3 billion barrels of surplus oil that has accumulated in storage - that can be drawn down by the end of 2021, and that suggests that prices could recover to something closer to $50 to $55 by late 2021."