Oil prices jumped over 2 per cent on Friday after strong US jobs data boosted Wall Street and investors found hope in the proposed meeting between President Trump and Kim Jong Un of North Korea. Anadarko photo.
Oil prices also boosted by shutdown of Libya’s 70,000 b/d El Feel oilfield
Oil prices rebounded on Friday after two days of losses on strong US jobs data which helped boost Wall Street and investors found hope geopolitical tensions could be eased by the proposed meeting between US President Donald Trump and North Korea’s supreme leader Kim Jong Un.
By 1:41 p.m. EST, Brent crude futures rose $1.51 to $65.12/barrel, a 2.37 per cent rise. US WTI was up 2.63 per cent, or $1.58 to $61.70/barrel. The Canadian Crude Index gained 4.91 per cent, or $1.86 to $39.71.
On Thursday, the White House announced President Trump accepted an invitation to meet with North Korean leader Kim Jong Un. This is the first face-to-face encounter between leaders of the two countries and if it goes well, could be a breakthrough in the standoff over North Korea’s nuclear weapons.
Skeptics, however, are concerned that by accepting the invitation, Trump has been out-maneuvered by Kim who will sell the meeting as the United States legitimizing the North Korean regime. For his part, Kim Jong Un has agreed to suspend further nuclear or missile tests until the meeting has taken place.
Following the release of US payrolls data showing strong job additions, Wall Street jumped on Friday and the S&P 500 index rose over 1 per cent. The Nasdaq Composite index hit a record high, further boosting oil prices.
John Kilduff, partner at Again Capital told Reuters the jobs report “speaks to strong, underlying economic conditions, and growth, which includes increased energy demand.”
Another factor boosting oil prices is the shut down of Libya’s 70,000 barrel per day (b/d) El Feel oilfield, despite the Petroleum Facilities Guard reporting it had reached a deal with Libya’s National Oil Corporation to reopen the facility.
Despite the optimism over oil prices on Friday, a number of analysts remain concerned about the oil sector.
“While this strong connect between oil and the macro is expected to continue, we are also seeing an increasingly bearish tilt to our short-term fundamental model,” Reuters reports Jim Ritterbusch, president of energy advisory firm Ritterbusch & Associates, said in a note.
“With the EIA’s estimated weekly production showing renewed upside acceleration, a record production is coming closer to offsetting this year’s demand that has generally been stronger than expected.”
Baker Hughes released its weekly rig count on Friday which showed a drop in oil rigs in the US by four to 796, but still is 179 rigs more rigs in production compared to this time last year. This marks the first drop in the US rig count in seven weeks.
In Canada, the number of oil rigs fell by 15 to 196 and there are 16 more oil rigs in operation than one year ago.
On Tuesday, the US Energy Information Administration said it expects US crude output in the fourth quarter of this year to reach 11.17 million b/d, up from its previous forecast of 11.04 million b/d.
Should the US reach these output levels, it would become the largest producer in the world, overtaking Russia.