Oil Prices React Negatively On Trumps Stimulus Package Deal

Yemisi Izuora

Oil prices slipped on Wednesday after U.S. President Donald Trump dashed hopes for a fourth stimulus package to boost the coronavirus-hit economy and on a larger-than-expected build-up in U.S. crude stocks.

U.S. West Texas Intermediate, WTI, crude oil futures fell 87 cents or 2.1 per cent, to $39.80 a barrel while Brent crude futures fell by 74 cents, or 1.7 per cent, to $41.91 a barrel.

President Trump, still being treated for COVID-19, ended talks on Tuesday with Democrats on an economic aid package for his pandemic-hit country with the U.S. presidential election only weeks away.

Price were also pressured by data from the American Petroleum Institute, API,  showing U.S. crude oil stocks rose by 951,000 barrels last week – more than expected.

“(This was) not exactly what the recovery doctor ordered as the oil market was already tanking from a two-week high after President Trump quashed hope for a pre-election stimulus deal,” said Stephen Innes, chief market strategist, at online brokerage AxiCorp.

But losses were limited by restrictions on the supply side.

Energy companies were busy securing offshore production platforms and evacuating workers on Tuesday, some for the sixth time this year, as Hurricane Delta took aim at U.S. oil production in the Gulf of Mexico, which accounts for 17 per cent of total U.S. crude oil output.

In Norway, meanwhile, the Lederne labour union said on Tuesday it will expand its opening oil strike from October 10 unless a wage deal can be reached in the meantime. Six offshore oil and gas fields shut down on Monday as Lederne ramped up its strike, cutting the country’s output capacity by 8 per cent.

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