Oil prices were in a state of flux over the 48 hours of Monday and Tuesday on mixed news from the Gulf of Mexico and China. A restart in production in the Gulf of Mexico following Hurricane Delta's departure and promising economic data from China causes prices to fluctuate over a 48-hour period, staying either just above or below $40.
The price of oil began the week in a slump, with West Texas Intermediate (NYSE: USO) spending the majority of Monday below $40, and Brent Crude (NYSE: BNO) spending the day around $41. Prices improved on Tuesday, with WTI jumping back above $40 and Brent reaching $42. By Tuesday evening, however, both prices appeared to be in a slight slump once again.
Monday's dour performance can be attributed to oversupply fears as oil production in the Gulf of Mexico continues after Hurricane Delta's passage, which forced over a quarter of the Gulf oil platforms to evacuate workers and halt production. With the hurricane gone, oil companies are preparing to restart production, sending employees back to rigs. Fears of oversupply quickly followed as the production restart coincided with the restart of oil production at Libya's largest oil field, and a Norwegian labor strike was resolved that had put a damper on European oil trading.
Tuesday's bounce is the result of promising trade data coming out of China. In September, China reported importing 11.8 million barrels per day, which was higher than August's import figures. The jump in prices, however, may be too presumptive, according to some experts.
"We find that China's record haul of crude growth is poised to cease as independent refineries have nearly fully utilized their state-issued import quotas and companies struggle with extremely high crude inventories. Therefore, despite the initial enthusiasm, we find that the uptick in oil prices today is unjustified," said Paola Rodriguez-Masiu of Rystad Energy.
China withstanding, there seems to be little cause for celebration for the energy sector. Yet another surge of infections in the United States, as well as sudden surges in Europe and Latin America, threaten energy market recovery.