What’s happening: Crude oil rose sharply on Monday on optimism around the US President Donald Trump’s recovery from covid-19.
What happened: Market sentiment was lifted by news of Trump being discharged from the hospital and hopes of a new fiscal stimulus being announced by the US government before the Presidential elections.
Oil prices were also boosted by the possibility of supply disruptions due to another in the Gulf of Mexico region.
Why it matters: Oil prices edged higher, along with US stocks, on reports of the US President’s improving health.
Trump had tested positive for the novel coronavirus late last week, which was followed by a flurry of conflicting statements from doctors and White House officials regarding his status. Statements from his physician and Trump’s brief motorcade to greet supporters outside the hospital had already lifted market sentiment on Monday. The President was later discharged from the Walter Reed hospital after a three-day stay and treatment for covid-19.
Markets also cheered the possibility of fresh stimulus measures by the US government, after Trump tweeted that a bill needs to be passed and House Speaker Nancy Pelosi said there had been progress in talks.
Meanwhile, supply disruptions at Equinor ASA also lifted oil prices. The Norwegian company reported that a trade union strike will result in four more fields in the North Sea being shut down, bringing the total number of fields affected by the strike to six.
Following disruptions by Hurricane Sally last month, there was news of Tropical Storm Delta approaching the Gulf of Mexico region and possibly disrupting energy production.
After declining in the previous two sessions, WTI (West Texas Intermediate) crude for November delivery surged 5.9% to close at $39.22 per barrel on the NYMEX (New York Mercantile Exchange). December Brent crude spiked 5.1% to settle at $41.29 per barrel on ICE Futures Europe. US oil lost around 8% last week, while Brent tumbled more than 7%.
What to watch: Investors will keep an eye on progress by US lawmakers on the stimulus front. Tropical Storm Delta and supply disruptions caused by it will also remain in focus. Markets will also be monitoring news on Trump’s health condition after his discharge from the hospital Monday night.
Investors await the American Petroleum Institute’s report on crude oil stockpiles, expected to be released later in the day. US crude stockpiles had fallen by 0.8 million barrels in the week ending September 25