Investing.com — Oil prices settled sharply higher Monday, underpinned by output disruptions at the Johan Sverdrup oilfield in Norway and increased intense fighting between Russia and Ukraine.
By 2.30 p.m. ET (1930 GMT), the futures traded 3.2% higher to settle at $69.16 a barrel and the contract climbed 3.2% to $73.30 a barrel.
Output disruption in Norway boost oil prices
Norway’s state-controlled Equinor said it had halted crude production at the Johan Sverdrup oil field following an onshore power outpage.
Disruptions to output at Johan Sverdrup — Europe’s highest producing oil field, is for about a quarter of all oil production in the North Sea — comes at a time many are worried about a supply surplus next year amid plans from OPEC and non-OPEC to step up output.
“Persistent worries over the clouded demand outlook in China and ample global supply outlook for next year continue to restrict any major price gains,” said analysts at ING, in a note.
The benchmark contracts slid more than 3% last week on weak data from China and after the International Energy Agency forecast global oil supply will easily exceed demand in 2025 even if cuts remain in place from a group of top producers.
EIA data has shown that US oil production remains near record levels, but the market is now executing more following the announcement that Chris Wright, CEO of Liberty Energy, would be appointed as the next Secretary of Energy.
President-elect Donald Trump’s selection of Wright is seen as a strong signal of the incoming administration’s focus on ramping up domestic fossil fuel production.
Ukraine to strike deep into Russia?
President Joe Biden’s administration has allowed Ukraine to use US-made weapons to strike deep into Russia, according to reports Sunday, in response to Russia’s deployment of North Korean ground troops to supplement its own forces.
This decision to let Ukraine strike deep into Russia with long-range US missiles escalates the conflict in Ukraine and could lead to World War Three, senior Russian lawmakers said on Sunday.
There has been little impact on Russian oil exports from the war so far, but if Ukraine were to target more oil infrastructure that could see oil markets add more of a geopolitical bid.
Latest positioning data
The latest positioning data showed that a fair amount of speculative selling in the benchmark contracts over the last week, noted ING.
“Speculators reduced 22,606 lots to the net long position, leaving them with a net long position of 103,539 lots as of last Tuesday. Money managers added gross shorts by 26,702 lots to 115,849 lots, the largest weekly increase since the September start,” said ING.
“Similarly, for NYMEX WTI, speculators decreased their net long by 18,043 lots over the week to 125,942 lots for the week ending on Nov. 12.”
