U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading sharply higher on Monday, on the hopes that President Donald Trump would be released from the hospital after spending the weekend there following his contraction of COVID-19 on Thursday.
Oil was also supported by an escalating workers’ strike in Norway. Energy Equinor shut four of its offshore oil and gas fields on Monday as its workers expanded their strike, a company spokesman told Reuters.
Traders also remain optimistic about a stimulus package after Friday’s weak September jobs report, highlighted the urgency for further coronavirus stimulus after a months-long stalemate in Washington.
Trump Expected to Move Back to White House
Prices slumped more than 4% on Friday following Trump’s diagnosis. However, he made a surprise appearance on Sunday in a motorcade outside the hospital where he is being treated, which helped improve market sentiment.
Today’s rally is being driven by speculation Trump will return to the White House sometime on Monday.
Norway Oil Workers’ Strike Escalates
The oil worker strike in Norway is escalating and four Equinor fields are closing after there was no progress in the negotiations between parties in the oil strike on Sunday night.
From midnight, another 126 members of the workers’ organization Lederne went on strike, joining the previous 43 members who have already gone on strike on the Johan Sverdrup platform.
Several new platforms will be affected by the escalation on Monday.
Stimulus Package Moves to Forefront
Trump’s illness, as well as a weak September jobs report, highlighted the urgency for further coronavirus stimulus after a months-long stalemate in Washington. Optimism for reaching a compromise has risen after House Speaker Nancy Pelosi signaled progress on Friday, saying “we continue to work on the text to move quickly to facilitate an agreement.”
Trump on Saturday put pressure on Congress to pass a deal. He said in a tweet that lawmakers should “WORK TOGETHER AND GET IT DONE.”
The price action suggests that investors are betting on a swift return to the White House by President Trump. However, Trump is not out of the woods yet as far as the virus is concerned, according to his doctors so there remains event risk.
The strike in Norway had been anticipated for about a week. Nonetheless, nothing cures low price like a disruption in supply especially since one of the factors driving prices lower last week was increased supply from Iran and Libya. Keep in mind, it’s going to be a short-term event so don’t expect a major dent to the global supply glut.
Optimism over a new stimulus package has moved to the forefront so this is our new wildcard.
For a look at all of today’s economic events, check out our economic calendar.