North Sea crude oil was suddenly trading for more than USD 55 a barrel on Monday, reversing a long decline that began last year. Predictions were mixed on whether oil prices will keep rising, but shares in state oil company Statoil jumped immediately as well.
Statoil was the big winner on the Oslo Stock Exchange, with its shares rising a remarkable 5.1 percent to close at NOK 135 a share. That boosted the company’s market value by around NOK 20 billion in just a few hours, reported newspaper Dagens Næringsliv (DN).
The sharp rise was fueled by the sharp rise in the price of Statoil’s main product. North Sea crude rose by more than USD 6 a barrel, a jump of nearly 13 percent since the last trade which itself had risen since last week’s lows in the USD 40s. They went over USD 55 and then settled back at just under USD 54 per barrel.
That also boosted shares in several other oil industry firms like Seadrill, up 5.65 percent, and Subsea 7, up 8.73 percent.
Bjarne Schieldrop, an oil analyst at SEB, offered two main reasons for the sudden rise in oil prices after months of decline that have cut them in half since last summer: “This began on Friday and then one of the factors was a quite strong decline in the number of oil rigs that are active in the US,” Schieldrop told DN. “In addition, the prices had moved sideways for nearly 13 trading days.” He noted that every time the oil price has hung up at a certain important level, it generally hasn’t gone sideways for more than 10 days before declining further.
“This time it moved sideways for fully 13 days without declining, and then came a dive in rig rates,” Schieldrop told DN.
The jump in oil prices, and in Statoil’s stock, ended up boosting the main index of the Oslo Stock Exchange by 0.94 percent, to over 600 points, closing at 601.80.