Oil futures lost ground early Friday, but the U.S. benchmark remains on track for a 10% weekly advance as Hurricane Delta nears landfall on the U.S. Gulf Coast and a strike curtails a large chunk of Norway’s crude output.
West Texas Intermediate crude for November delivery on the New York Mercantile Exchange fell 41 cents, or 1%, to $40.78 a barrel, but was set for a weekly rise of 10.1%. The global benchmark, December Brent crude fell 39 cents, or 0.9%, to 42.95 a barrel on ICE Futures Europe.
“Crude oil in the red, and weakness in the spread tells me the market is more worried about refineries shutting down in the wake of Hurricane Delta and sending crude oil to storage, than it is of crude oil production being shut in,” said Robert Yawger, director of energy at Mizuho Securities, in a note.
The nearby November contract was trading at a 30-cent discount to the December contract, with important technical support seen at -31 cents, he said.
Hurricane Delta, a major Category 3 hurricane with sustained winds of 120 miles per hour, was expected to make landfall on the Louisiana coast later Friday.
The Bureau of Safety and Environmental Enforcement late Thursday estimated that around 91.5% of current oil production in the Gulf of Mexico had been shut in as a result of the storm, along with 61.8% of natural-gas output.
Oil has also found support this week as a strike in Norway continues. If the strike remains unresolved, the country’s largest North Sea oil field could be forced to shutdown by next week, which would bring production cuts to just under 1 million barrels a day, according to Commerzbank.