Oil rebounded in New York after the biggest drop in two weeks as a labor strike threatened to halt production in Norway, Western Europe’s biggest exporter.
Futures advanced as much as 0.9 percent. Statoil ASA said it may declare force majeure on fuel deliveries as it prepares to halt more offshore fields at midnight. Prices slid 3.2 percent on July 6, the biggest decline in two weeks, after a report showed the U.S. created fewer jobs than estimated in June. Iraq’s Deputy Prime Minister for Energy Affairs Hussain al-Shahristani said oil’s two-month plunge is unjustified. European Union sanctions on Iranian imports took effect at the start of this month.
“If the lockout in Norway goes ahead, it will come at a highly inconvenient time, with Iranian oil out of the market and continued supply losses in Sudan and elsewhere,” said Michael Poulsen, an analyst at Global Risk Management in Middelfart, Denmark. “There’s a high likelihood of the government having a friendly chat with both parties, though that’s less certain than a week ago.”
West Texas Intermediate oil for August delivery climbed as much as 76 cents to $85.21 a barrel in electronic trading on the New York Mercantile Exchange and was at $84.80 at 12:34 p.m. London time. The contract slid $2.77 on July 6 to close at $84.45, the lowest settlement since July 2. Prices are down 14 percent this year.
Brent crude for August settlement gained 66 cents, or 0.7 percent, to $98.85 a barrel on the London-based ICE Futures Europe exchange. The European benchmark’s premium to WTI was at $13.91 compared with $13.74 on July 6.
Goldman Sachs Group Inc. expects the Norwegian government to intervene and settle the dispute between employers and unions, according to a report today. Norway’s strike, which started last month, is already disrupting as much as 250,000 barrels of oil output a day, according to Statoil, the nation’s largest energy company.
Talks in Oslo supervised by a state mediator failed yesterday. Statoil may declare force majeure on deliveries, a legal clause allowing companies to suspend contractual obligations because of circumstances beyond their control, Bard Glad Pedersen, a spokesman, said today in an e-mail.
Oil in New York has technical support along the middle Bollinger Band on the daily chart, at around $83.80 a barrel today, according to data compiled by Bloomberg. Futures halted their decline July 6 near that indicator. Buy orders tend to be clustered near chart-support levels.
“The oil market is flooded with crude from pumping more than the world requires,” Iraq’s al-Shahristani said in an interview yesterday on Iraq’s Al Najaf television. “This affects the prices, which started to dip during the last three months from $125 to around $80. This drop is unjustified, and it was a result of some countries raising crude production without any justification.”
Three Libyan oil ports at Ras Lanuf, Brega and Es-Sider have resumed exports after protests, according to the chairman of state-run National Oil Corp.
Demonstrators had occupied the ports last week, cutting crude exports by about 300,000 barrels a day, Nuri Berruien said yesterday in a phone interview from the capital, Tripoli. The country’s output will return to 1.5 million barrels a day within 24 hours, he said.
Hedge funds and other money managers raised bullish bets on Brent crude by 24,020 contracts, or 58 percent, to the highest in a month in the week ended July 3, according to data from ICE Futures Europe.
Speculative bets that prices will increase, in futures and options combined, outnumbered short positions by 65,435 lots, the London-based exchange said today in its weekly Commitment of Traders report. That compares with net-longs of 41,415 contracts a week earlier.
U.S. payrolls rose by 80,000 workers in June, compared with a forecast of 100,000 in a Bloomberg News survey of economists, Labor Department data on July 6 showed.