Oil rose from a three-week low amid a broader rally in Asian stocks as investors weighed the possibility President Donald Trump may soon leave hospital, despite contradictory accounts about his coronavirus infection.
Futures rose 2.5% in New York to trade near $38 a barrel after the biggest weekly drop since June. A Sunday briefing by doctors left doubt about Trump’s condition, but they insisted the president is doing well and could be discharged as soon as Monday. Meanwhile, Libyan oil output continued to climb, adding more supply to a market struggling with virus-driven demand loss.
Oil is back below $40 a barrel with a resurgence of the outbreak in some major economies raising concerns about a sustained recovery in consumption. OPEC+ members are also slowly boosting output after historic cuts to prop up prices, while in the US, drillers are returning more rigs to fields.
“It looks like there hasn’t been a big impact on Trump’s health so far," said Howie Lee, an economist at Oversea-Chinese Banking Corp, adding that market uncertainty will persist until there’s a declaration on the president’s health. “The return of Libyan oil production destroys the very small deficit that the market has been pining for."
Brent’s three-month timespread was at $1.37 a barrel contango, compared with $1.17 a week earlier. The change in the market structure indicates that concerns about over-supply are rising.
At the briefing on Trump’s health, his physician said he gave a misleading statement about the president receiving oxygen, the latest in a series of contradictory and confusing accounts about his illness. Meanwhile, US House Speaker Nancy Pelosi was optimistic on Friday that a bipartisan stimulus deal could be done, and said Trump’s diagnosis “changes the dynamic."
Libya’s daily oil output has expanded to 295,000 barrels, with fields that feed the newly restarted eastern ports of Hariga, Brega and Zueitina ramping up supply. Production was 250,000 barrels a day a week ago and will rise further as ships dock and load crude from storage tanks, allowing fields to pump more.
“There is growing concern that the oil demand recovery will be delayed," said Jun Inoue, an economist at Mizuho Research Institute in Tokyo. “WTI is expected to stay below $40 unless OPEC+ increases its production cutbacks."
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.