Oil prices jumped by approximately 2% on Monday after U.S. President Donald Trump’s doctors suggested he could be discharged from hospital as soon as Monday. Trump tested positive for the coronavirus a few days ago, causing turbulence on the markets.
However, the U.S. president’s health update eased political uncertainty, lifting Brent to $39.96 a barrel, higher by 1.8%. Furthermore, U.S. West Texas Intermediate (WTI) crude skyrocketed by 2.1%, trading at $37.81 a barrel.
On Friday, prices had collapsed by more than 4% due to uncertainty surrounding Trump’s health. This added to investors’ worries that rising COVID-19 case numbers could hinder global economic recovery.
However, analysts stated that an easing of the worst fears about Trump’s health condition drove Monday’s rebound.
Avtar Sandu, the senior commodities manager at Phillip Futures, noted that U.S. President Donald Trump’s improving health over the weekend boosted the markets. Even though there were a lot of conflicting reports on his health, generally, he’s improving. Sandu added that Trump could be back to work soon. However, traders were concerned about the stalled U.S. fiscal stimulus plan to aid oil demand recovery.
What Were the Other Reasons for Oil’s Rally?
An expanding workers’ strike in Norway also supported prices on Monday. According to the Norwegian Oil and Gas Association, it could reduce the country’s production capacity by 330,000 barrels of oil equivalent per day or 8% of its total output. Libya has also seen a nearly three-fold increase in its production, which hit 270,000 barrels per day last week.
Meanwhile, a recent price boost has prompted some American producers to resume drilling. According to data from Baker Hughes, this week, U.S. energy firms added oil and natural gas rigs for the first time since October 2018.
However, this rise in supplies comes at a time when China’s crude imports are slowing. JP Morgan analysts think that could depress Brent to $41 a barrel in the fourth quarter, thus leaving OPEC and its allies, including Russia, to face another decision on supply cuts in November.