Oil Prices Edge Up Amid Pipeline Outage
16 December 2017 - 4:04AM
Dow Jones News
By Sarah McFarlane
Oil prices firmed Friday, supported by a pipeline outage in the
North Sea and ongoing cuts by major producers, but higher forecasts
for U.S. output in 2018 from major energy groups this week limited
gains.
U.S. crude futures recently rose 31 cents, or 0.54%, to $57.35 a
barrel on the New York Mercantile Exchange. Brent, the global
benchmark, rose 13 cents, or 0.21%, to $63.44 a barrel on ICE
Futures Europe.
Energy markets are "in a state of confusion," analysts at TAC
Energy wrote in a client note Friday. The shutdown of the Forties
Pipeline System pushed Brent prices to their highest level since
June 2015.
But prices have been in a "back and forth pattern" since, the
TAC analyst said, amid reports that suggested that supply and
demand might not be as tight as some were expecting.
The time frame for a restart of the Forties Pipeline System
remained uncertain after owner Ineos discovered a crack in a pipe
last week. The outage stops the flow of around 450,000 barrels of
North Sea oil a day.
The outage of the pipeline, "which looks set to remain shut for
longer than initially thought," is supporting prices, analysts at
Commerzbank said in a note.
Production from the Organization of the Petroleum Exporting
Countries fell to a six-month low in November, but a jump in U.S.
output will make it more difficult to drain global stocks by the
end of 2018, the group said in its monthly report on Wednesday.
OPEC and other major producers agreed last month to extend a
deal to cut supplies through to the end of 2018 in the hope of
bringing stocks in the Organization for Economic Cooperation and
Development, or OECD, in line with their five-year average.
Growing production in countries that didn't partake in the deal,
however, makes it more difficult for that effort to succeed. The
International Energy Agency on Thursday revised non-OPEC supply
growth in 2018 up 200,000 barrels a day to 1.6 million barrels.
"A fearsome resurgence in non-OPEC supply next year may cause an
OPEC-led drive to eliminate the global oil oversupply to falter,"
said Stephen Brennock at brokerage PVM. "OPEC supply restrictions
are at risk of being overshadowed by U.S. producers which will
strike back with a vengeance in 2018."
Gasoline futures rose 0.05% to $1.6715 a gallon. Diesel futures
rose 0.77 cent, or 0.4%, to $1.9176 a gallon.
Alison Sider contributed to this article
Write to Sarah McFarlane at sarah.mcfarlane@wsj.com
(END) Dow Jones Newswires
December 15, 2017 11:49 ET (16:49 GMT)
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