Oil Futures End up 1.8% as Market Braces for Major Production Disruption in Norway

By Midnight Trader,  July 09, 2012, 02:46:44 PM EDT

Crude oil for August delivery settled up 1.8% at US$85.99 a barrel, gaining traction as the trading day unfolded, as traders braced for a possible shutdown of oil production in Norway.

Oil producers there failed to reach an agreement on Sunday. The oil industry association has threatened to close offshore production Tuesday unless the government intervenes. The dispute centres on pension issues.

"It seems likely that offshore production is being shut down as of midnight tonight. Although this will likely only be a temporary supply loss as the parties involved thrash out a deal, the concern of two million barrels a day coming offline has the market twitchy," Marketwatch quoted Matt Smith, analyst with Summit Energy in Kentucky, as saying.

Analysts at JBC Energy estimated about 150,000 barrels a day of output capacity is already offline due to the strike, and an additional 40,000 barrels a day are missing due to a production shutdown in one of Norway’s main fields.

Norway -- the world's fifth-largest oil supplier -- exported about 1.6 million barrels a day of crude in 2010, with most of it going to the U.K., the Netherlands, and France.

On the TSX, Suncor, and the energy sector in general, are both down about 0.6% as the final hour of trading gets underway.




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Commodities

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