Oil jumps on supply cuts in U.S. Gulf, wariness about North Sea, OPEC
By Laura Sanicola
NEW YORK (Reuters) - Oil stood above $ 43 a barrel on Thursday, aided by production shutdowns ahead of a storm in the US Gulf of Mexico and the possibility of supply cuts from Saudi Arabia and Norway.
Markets rose sharply at noon following a report by Dow Jones that Saudi Arabia is considering reversing course via OPEC's planned production increase early next year.
Brent crude rose $ 1.35, or 3.2%, to $ 43.34 after falling 1.6% on Wednesday. U.S. West Texas Intermediate (WTI) crude oil rose 1.24 cents, or 3.1%, to $ 41.19 after falling 1.8% on Wednesday.
Oil was also helped by the prospect of further production stoppages in the North Sea due to a workers' strike. Oil companies and labor officials said they would meet with a government-appointed mediator on Friday to try to get both sides to end a strike that threatens to cut Norwegian oil and gas production by about 25%.
The organization of the petroleum exporting countries has been challenged by rising production in Libya, an OPEC member exempt from production cuts, as well as the increase in coronavirus cases in many regions of the world.
"If that's true, the Saudis' decision rewards the fraudsters in OPEC while recognizing the demand challenges that remain," said Phil Flynn, an analyst at Price Futures Group in Chicago.
"This possible widening of the cuts is definitely positive for the markets and potentially provides the seasonal low that is happening anyway," he said.
The market has also received support from the Hurricane Delta, which is expected to escalate into a strong Category 3 storm on the Gulf Coast. Almost 1.5 million barrels of daily production were stopped.
"Hurricane Delta is a crude oil supply event and if all Gulf of Mexico production goes offline we will likely lose more than 5 million barrels of crude oil to the storm," said Andrew Lipow, president of Lipow Oil Associates in Houston, Texas.
(Additional reporting by Alex Lawler. Sonali Paul, Shu Zhang and Ahmad Ghaddar; editing by David Gregorio, Jason Neely and Mark Potter)
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