By Geoffrey Smith
Investing.com -- Crude oil prices rose sharply on Tuesday as hopes for a U.S. fiscal stimulus package and a sustained recovery in demand combined with strike- and weather-related supply disruptions to push West Texas Intermediate prices back above $40 a barrel.
By 10:15 AM ET (1415 GMT), U.S. crude futures were up 3.7% at $40.66 a barrel, their highest in over a week. The international benchmark blend Brent was likewise up 3.4% at $42.70 a barrel..
The tone in the market so far this week has benefited from reports that Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi are closing in on a deal on fresh stimulus for the economy. It’s also been helped by a stronger-than-expected business survey from the Institute for Supply Management, which has fostered hopes that U.S. demand can keep whittling away the stockpiles that accumulated in the first half of the year.
GasBuddy’s Patrick de Haan said via Twitter earlier that GasBuddy data showed U.S. gasoline demand Monday was up 3.6% on the week and at its highest level since Labor Day.
U.S. Gasoline RBOB Futures were up 3.2% at $1.2319 a gallon.
The American Petroleum Institute will publish its weekly assessment of U.S. crude inventories at 4:30 PM ET, the risks seemingly tilted toward another draw on stockpiles, which would add to last week’s unexpectedly strong draw of 831,000 barrels.
Government data, due on Wednesday, are expected to show a rise of 400,000 barrels in crude stocks but a 900,000 decline in gasoline stocks. The U.S. government is also due to release its latest Short-Term Energy Outlook in the course of the day.
The supply-demand balance is also being shifted by Hurricane Delta and Tropical Storm Gamma, which have shut in production in the Gulf of Mexico.
Delta “will shut down a significant portion of Gulf of Mexico oil and gas production and create a threat to the U.S. “refinery row’ and flooding in soaked Louisiana,” Phil Flynn, an analyst with the PRICE Futures Group, wrote in a post for Investing.com.
BP (NYSE:BP), BHP and Hess (NYSE:HES) are all reported to have shut in at least part of their production in the Gulf.
Elsewhere, a strike involving Norwegian oil workers has now taken some 8% of the country’s oil and gas production temporarily offline.