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Oil prices rise over supply losses, U.S. relief package hopes; Bonny Light sheds $1.14

Oil prices rise as OPEC, allies agree deal to cut output by 10m barrels/day

Oil prices climbed on Thursday, bolstered by production outages in the Gulf of Mexico and potential of higher supply losses in Norway and by optimism regarding a U.S. COVID-19 stimulus package.

Brent crude futures advanced by 69 cents or 1.64%, to $42.68 a barrel by 10:13 West Africa Time (WAT), after losing 1.6% on Wednesday.

U.S. West Texas Intermediate (WTI) crude futures added 53 cents, or 1.33%, to $40.48 by 11:12 WAT, having contracted by 1.8% on Wednesday.

Bonny Light, Nigeria’s banner crude grade, slimmed down by $1.14 or 2.75% to $40.24 on Wednesday. Qua Iboe, another major oil grade, dipped by 4 cents or 0.10% to $40.90 per barrel by 06:38 WAT on Thursday.

“If Delta stays weak, the oil rally could quickly run out of steam,” Jeffrey Halley, analyst at brokerage OANDA said of the hurricane sweeping through the Gulf of Mexico.

Also helping oil was the possibility of more output shutdowns in the North Sea by reason of an industrial action. Its biggest oilfield, the Johan Sverdrup field, is bound to halt operations except the strike is terminated not later than 14th October.

Read also: Oil prices drop as Trump cancels stimulus talks, Bonny Light gains $0.99

The reduction in output dispels worries concerning low demand, uptick in coronavirus cases as well as an upscale in United States oil stockpiles, according to the Energy Information Administration.

Fresh hopes of some U.S. coronavirus relief package also lifted the market.

President Trump tweeted that Congress should pass money for small businesses, airlines and stimulus cheques for individuals after cancelling negotiations over a bigger stimulus deal.

Oil plumbed new lows in April on account of the coronavirus crisis, with benchmark Brent crumbling to its weakest level in 21 years below $16. An output reduction spearheaded by the Organisation of the Petroleum Exporting Countries (OPEC) stimulated prices.

The cartel is now confronted with a fresh difficulty posed by increasing output from Libya, a member of OPEC excused from cutting production.

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