TRD: Oil Inches Higher, Supported by Norwegian Strike
Crude futures were slightly higher Monday after negotiations between striking oil and gas workers and their employers in Norway over the weekend failed to end in agreement, increasing the likelihood of a shutdown in production later in the evening.
However, negative economic news kept any price gains in check, as investors remained wary of the state of the global economy ahead of yet another meeting of euro zone finance ministers in Brussels.
At 0957 GMT, the front-month August Brent contract on London's ICE futures exchange was 47 cents, or 0.5%, higher at $98.66 a barrel.
The front-month August contract on the New York Mercantile Exchange was trading up 36 cents, or 0.4%, at $84.81 per barrel.
Analysts said the impending lockout in Norway was the main factor supporting the oil price, with a lockout of oil production due to begin at 2200 GMT. Statoil said it expected the action to result in a shortfall of 1.2 million barrels of oil equivalent a day and cost a daily rate of NOK520 million.
The dispute centers on employers cutting a pension add-on introduced in 1998 for workers who retire at 62, three years ahead of the general age for oil workers and five years ahead of Norway's official retirement age. Following talks over the weekend, both parties remained far from agreement, making a lockout seem increasingly likely. Many market participants had expected the Norwegian government would intervene to resolve the strike, as it has in the past.
Still, most market watchers said the strike was likely to be no more than a short-term prop for prices, with intervention from the Norwegian government increasingly likely as the situation becomes more severe.
"The more the strike escalates, the sooner it is likely to end," said Commerzbank in a note. "Thus the price-supporting effect of the oil strike in Norway will probably be only temporary in nature," it added.
Norway is the world's eighth largest oil exporter and second largest natural gas exporter.
Meanwhile, prices remain at risk from negative economic news, as evidenced by the more-than $2.00-a-barrel drop they experienced Friday after a weak jobs report from the U.S.
At 0957 GMT, the ICE's gasoil contract for August delivery was up $2.00, or 0.2%, at $864.50 per metric ton, while Nymex gasoline for August delivery was 172 points, or 0.6%, higher at $2.7332 per gallon.
