Oil rebounds on Trump health update, Norway shutdowns

U.S. firms added drilling rigs for 3rd week in a row -data

  
Image used for illustrative purpose. A view of the Johan Sverdrup oilfield in the North Sea, January 7, 2020. Carina Johansen/NTB Scanpix/via REUTERS

Image used for illustrative purpose. A view of the Johan Sverdrup oilfield in the North Sea, January 7, 2020. Carina Johansen/NTB Scanpix/via REUTERS

LONDON- Oil prices rose on Monday after doctors said U.S. President Donald Trump could soon be discharged from the hospital where he is being treated for COVID-19, while six Norwegian offshore oil and gas fields were shut as more workers joined a strike.

Brent was up $1.81, or 4.6%, to $41.08 a barrel by 1337 GMT. U.S. West Texas Intermediate (WTI) crude was $1.91, or 5.2%, higher at $38.96 a barrel.

"This bout of strength is unlikely to have the legs to withstand the growing pile of unknowns. After all, the oil market is trapped in an unending cycle of uncertainty," said Stephen Brennock of oil broker PVM.

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.

According to his doctors, he could be discharged from hospital later on Monday. 

Hopes for a U.S. stimulus package to counter the economic impacts of the pandemic also lent some support to prices as House Speaker Nancy Pelosi said on Sunday progress was being made in talks with Treasury Secretary Steven Mnuchin. 

Oil was also supported by an escalating workers' strike in Norway over pay. Six Norwegian offshore oil and gas fields were shut on Monday.

The strike will cut Norway's total output capacity by just over 330,000 barrels of oil equivalent per day, or about 8% of total production, according to the Norwegian Oil and Gas Association (NOG). 

"This will not entail any serious tightening of supply on the market as concerns about demand and fears of a renewed oversupply predominate at present," said Commerzbank analyst Carsten Fritsch.

The reduction in Norwegian production was mainly balanced by rising output in Libya, analysts said.

Libyan oil production has increased to 290,000 barrels per day, a source told Reuters on Monday, almost three times more than its output during a blockade that began in January and ended in September.

Meanwhile, recent price rises have prompted some U.S. producers to resume drilling. U.S. energy firms this week added oil and natural gas rigs for a third week in a row for the first time since October 2018, data from Baker Hughes showed on Friday. 

(Reporting by Bozorgmehr Sharafedin in London; Additional reporting by Florence Tan in Singapore; Editing by Steve Orlofsky and Mark Potter) ((bozorgmehr.sharafedin@thomsonreuters.com;))

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