Crude oil prices extended their rally on Monday, as threats of a strike action in Norway by a section of oil workers threatens to reign in North Sea production. A potential strike is being threatened at the Mongstad oil export terminal in Norway, and this could lead to a shutdown of major North Sea production fields. Gas supplies to Europe could also be threatened, according to a statement by Equinor, the company that operates the terminal.
The strike is being called for Tuesday by the Safe Labour Union, who want better wages. Unless a deal can be struck before then,
a strike could disrupt storage and export operations. Production from offshore fields could also be affected, especially the Troll and Johan Sverdrup wells.
Also adding to higher crude oil prices is the continuing risky sentiment that pervades the market as global economic recovery is expected from vaccine rollouts.
The Brent benchmark is trading at 13-month highs presently; up 1.02% at the time of writing.
Technical Levels to Watch
Today’s rally appears muted as market participants wait to see what happens in Norway. Meanwhile, the intraday high is just short of the expected resistance barrier at 64.26 (22/27 November highs). This barrier must be breached before brent crude can hit the 65.98 high attained on 20 January 2020.
On the other hand, faltering demand or abortion of the proposed Norway strike could be the impetus that allows for a pullback towards 62.21, with further decline testing support at 60.07. If this support fails to hold, then 57.47 and 56.47 could serve as additional targets to the south.
Crude Oil Price (Brent); Daily Chart