BLBG:Oil Rises To One-Month High As Strike Halts Norway Output
Oil rose to its highest in a month in London as Statoil ASA (STL), Norway’s largest oil producer, prepared to halt production from the country as employers locked out striking platform workers after mediation talks failed.
Brent futures gained as much as 2.5 percent. The Norwegian Oil Industry Association, which represents employers, will ban all members of the Industri Energi, SAFE and Lederne labor unions who are covered by offshore pay agreements from midnight on July 9, Statoil said today on its website. Oil had advanced earlier on forecasts that the European Central Bank will cut interest rates today and that U.S. inventory data will show crude supplies declined.
“This strike and potential shutdown negatively impacts North Sea supply, as such the price of the Brent benchmark; that’s why this is significant,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London. “The government has the legal right to end the strike and prevent the shutdown. The question is when they’ll use it.”
Brent oil for August settlement rallied as much as 2.5 percent to $102.25 a barrel, its highest price since June 7 on the London-based ICE Futures Europe exchange. It was at $101.56 at 10:54 a.m. local time. The European benchmark’s premium to the U.S. benchmark, West Texas Intermediate, rose to $13.31 from $12.11 yesterday.
Oil for August delivery on the New York Mercantile Exchange was at $88.19 after declining as much as $1.16 to $86.50 a barrel in electronic trading. There was no floor trading yesterday because of the U.S. Independence Day holiday and transactions since the July 3 closed will be booked with today’s trades for settlement purposes. Prices are down 11 percent this year.
U.S. crude stockpiles probably decreased by 2.3 million barrels last week, according to a Bloomberg survey before an Energy Department report today. The ECB will take its benchmark interest rate below 1 percent for the first time, cutting it by a quarter percentage point to 0.75 percent, and reduce its deposit rate to zero, according to a Bloomberg News survey of economists.
To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
