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Oil Price Fundamental Daily Forecast – Erases Earlier Loss Amid Libyan Political Crisis, Norwegian Strike

·3 minuto per la lettura

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher on Friday after reversing an earlier loss. This move follows a more than 3% drop in the previous session.

Driving the choppy price action on the bullish side are worries about supply outages in Libya and expected shutdowns in Norway. The bearish catalysts are worries about the strength of the global economy and OPEC+’s plans to stick to its planned oil output hikes in August. Position-squaring ahead of the long U.S. holiday weekend could also be contributing to the early volatile trade.

At 11:25 GMT, August WTI crude oil is at $107.75, up $1.99 or +1.88% and September Brent crude oil is at $111.16, up $2.13 or +1.95%. On Thursday, the United States Oil Fund ETF (USO) settled at $80.36, down $2.59 or -3.12%.

Libya’s National Oil Corporation Declares Force Majeure

Libya’s oil exports have plunged to about a third of last year’s levels after the worsening political crisis prompted the National Oil Corporation (NOC) to suspend shipments from two of the country’s biggest ports.

Force Majeure was declared on Thursday at the Es Sider and Ras Lanuf ports as well as the El Feel oilfield. Meanwhile, Force majeure is still in effect at the ports of Brega and Zueitina, NOC said.

The current developments have caused production to drop sharply with daily exports falling to between 365,000 and 409,000 bpd, a decrease of 865,000 bpd compared to production in “normal circumstances”, NOC said.

Some Norwegian Oil Workers to Strike Starting July 5

Seventy-four Norwegian offshore oil workers at Equinor’s Gudrun, Oseberg South and Oseberg East platforms will go on strike from July 5, the Lederne trade union said on Thursday. This could shut down about 4% of Norway’s oil production, according to Reuters.

Biden to Visit Saudi Arabia

U.S President Joe Biden is scheduled to make a three-stop trip to the Middle East in mid-July that includes a visit to Saudi Arabia. He said on Thursday he would not directly press Saudi Arabia to increase oil output to curb soaring prices. This would be difficult anyway with the Saudi’s nearing full-capacity after agreeing with other OPEC+ members on Thursday to increase production by 648,000 barrels per day (bpd) in July and August.

Daily Forecast

With Monday a U.S. bank holiday, we are anticipating more two-sided price action with some traders expected to square positions.

Traders are also going to continue to monitor the strength of the global economy as it pertains to more aggressive rate hikes and the possibility of a recession that could curtail demand. However, according to the latest Reuters poll, though economic risks could continue to climb, oil prices are expected to stay above $100 a barrel this year as Europe and other regions struggle to wean themselves off Russian supply.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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