Oil traded up nearly 10% this week over concerns that Hurricane Delta would hit oil production facilities near the Louisiana coast. The Hurricane has shut 1.67 million barrels per day, or 92% of the Gulf’s oil output, the most since 2005 during Hurricane Katrina. Prices were also bolstered by reports of a potential strike in Norway, which raised the prospect of supply from the major producer being slashed by up to 25%. Norwegian oil firms struck a wage bargain with labour union officials on Friday, ending the strike. A correction in prices is likely coming as the Norway strike is resolved and when the hurricane in the U.S. goes away. Looking forward, oil prices are likely not heading much higher than current levels of around $40 a barrel for rest of the year, but neither are they likely to fall much as bearish factors have been priced in.
Note, OPEC said on Thursday world oil demand will plateau in the late 2030s and could by then have begun to decline (a sharp shift in philosophy from the Group). Notably, Saudi Aramco intend to increase oil production in the years ahead in an attempt to monetize its oil reserves with an eye on peak demand. Aramco is aiming to increase its production capacity to 13 mb/d from 12 mb/d currently
A Canadian Energy expert