The price of oil is continuing to rebound on Tuesday morning, as investors in the world’s most widely used commodity continue to react to the failure of oil producers to agree on a production freeze in Doha over the weekend, and an ongoing oil worker strike in Kuwait.
Just after 8:30 a.m. BST (3:30 a.m. ET) both major international benchmarks, Brent and West Texas Intermediate, are trading in positive territory, and gaining strongly. Brent, is up by more than 1.65% to $43.62 per barrel, while WTI has jumped 1.43% to $41.78. Here’s how both benchmarks look early this morning:
While oil is rebounding strongly, it is likely being helped by the ongoing strike of oil workers in Kuwait. Kuwaiti workers went on strike on Sunday, and that has led to production being slashed from 2.8 million barrels per day at March estimates, to just 1.1 million barrels now. Workers are striking
over a plan to change the way public sector workers in the country are paid, which could lead to wage cuts.
Deutsche Bank’s Jim Reid points out in his early morning note to investors:
The Kuwait strike news which we highlighted yesterday was cited as a big factor in the changing tune and it appears that the strike is set to continue into today, although it feels like the ‘big if’ for markets now will be the duration of the strike and how much Kuwait can compensate some of that lost production elsewhere to get back closer to normal levels.
Once Kuwait addresses decreased supply however, things could return to losses, and the true effects of the failure of producers to agree a deal in Doha could be felt.
As Accendo Markets’ Mike van Dulken argues (emphasis his):
This [the strong performance of US stocks] mirrored oil’s performance as crude prices themselves showed alarming resilience in the face of a failed Doha production meeting. Note however that a 3rd day of strike action by oil workers in Kuwait could well be supporting things for the moment.