LONDON (Reuters) - Oil prices inched up on Friday, setting both benchmark contracts on track for their biggest weekly gains since early June, on the back of supply outages caused by a storm in the Gulf of Mexico and a strike of offshore workers in Norway.
Both contracts are on track for gains of around 11% this week, the first weekly rise in three weeks.
Brent’s six-month contango, a market structure where the front-month Brent futures are trading at a discount to later contracts implying current oversupply, has shrunk to around $1.90 a barrel from $3.24 less than a month ago.
Norwegian oil company and labour officials said they would meet with a state-appointed mediator on Friday in an attempt to bring an end to a strike.
An escalation could almost triple the existing outage from the ongoing strike if no solution is reached by Oct. 14, taking the total capacity cut to around 934,000 barrels of oil equivalents per day.
In the Gulf of Mexico, producers have shut 1.69 million barrels per day of oil, or 92% of the region’s offshore oil, and 1.67 billion cubic feet per day, or nearly 62% of its natural gas output, bracing for the impact of Hurricane Delta.
“Non-OPEC production is going to take a big hit over the next couple of weeks and this will continue to drive the rebalancing of the oil market,” said Edward Moya, senior market analyst at OANDA.
The Organization of the Petroleum Exporting Countries (OPEC) said on Thursday world oil demand will plateau in the late 2030s and could by then have begun to decline.
Additional reporting by Aaron Sheldrick in Tokyo;Editing by Elaine Hardcastle
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