Investing.com — Oil prices fell sharply higher on Monday, buoyed by production disruptions at Norway’s Johan Sverdrup oil field and increased intense fighting between Russia and Ukraine.
At 2:30 PM ET (1930 GMT), futures traded 3.2% higher to settle at $69.16 per barrel and the contract rose 3.2% to $73.30 per barrel.
A disruption in production in Norway is pushing up oil prices
Norway’s state-controlled Equinor said it had halted crude oil production at the Johan Sverdrup oil field after an onshore power outage.
Disruptions to production at Johan Sverdrup – Europe’s highest-producing oil field, accounting for around a quarter of total North Sea oil production – come at a time when many are concerned about a supply glut next year, amid plans by the OPEC and non-OPEC to increase production.
“Ongoing concerns about the bleak demand outlook in China and the ample global supply outlook for next year continue to limit major share price gains,” ING analysts said in a note.
Benchmark contracts fell more than 3% last week on weak data from China and after the International Energy Agency forecast that global oil supply will easily exceed demand by 2025 even if cuts by a group of top producers remain in place.
EIA data has shown that US oil production is near record levels, but the market is now ramping up following the announcement that Liberty Energy CEO Chris Wright would be named the next Secretary of Energy.
President-elect Donald Trump’s choice of Wright is seen as a strong signal of the new administration’s focus on increasing domestic fossil fuel production.
Will Ukraine strike deep into Russia?
President Joe Biden’s administration has allowed Ukraine to use American-made weapons to strike deep inside Russia, reports showed on Sunday, in response to Russia’s deployment of North Korean ground troops to supplement its own forces.
The decision to have Ukraine attack deep into Russia with US long-range missiles escalates the conflict in Ukraine and could lead to World War III, senior Russian lawmakers said on Sunday.
The war has had little impact on Russian oil exports so far, but if Ukraine were to focus on more oil infrastructure, oil markets could make a bigger geopolitical bid.
Latest positioning data
The latest positioning data shows that there has been quite a bit of speculative selling in the benchmark contracts over the past week, ING said.
“Speculators have reduced 22,606 lots to the net long position, leaving them with a net long position of 103,539 lots last Tuesday. Money managers added gross shorts by 26,702 lots to 115,849 lots, the largest weekly increase since September’s inception,” ING said.
“Similarly, speculators for NYMEX WTI reduced their net long by 18,043 lots during the week to 125,942 lots for the week ending November 12.”
