Oil rises on UK pipeline outage, U.S. supply caps gains

19/12/2017 17:07 AST

Oil edged up towards $64 a barrel on Tuesday, helped by a North Sea pipeline outage, OPEC-led supply cuts and expectations that U.S. crude inventories probably fell for a fifth week.

But rising output in the United States has put a lid on gains. Shale production will rise to a record in January, according to a government forecast published on Monday, as higher prices encourage companies to pump more.

Brent crude LCOc1, the global benchmark, was up 30 cents to $63.71 a barrel at 1259 GMT. U.S. crude CLc1 gained 37 cents to $57.53.

The shutdown of the North Sea’s Forties pipeline since last week has supported Brent in particular, as Forties is the largest of the five crude grades underpinning the benchmark. Brent reached $65.83, its highest since mid-2015, on Dec. 12.

“This should ensure buying pressures remain at the fore of the Brent structure until the turn of the year at the very least,” said Stephen Brennock of oil broker PVM.

Ineos, the operator of the Forties pipeline, said on Tuesday it was moving forward with a preferred repair option and the timeframe for the fix remained two to four weeks starting from Dec. 11, the date of the shutdown.

Oil ticked up after reports that a missile was fired at the Saudi Arabian capital Riyadh from Yemen, but Saudi Arabia said it intercepted the missile and no casualties were reported.

“The market has not been doing very much and you do have headlines etcetera, but it doesn’t really change anything,” said Olivier Jakob, an analyst at Petromatrix.

A deal by the Organization of the Petroleum Exporting Countries and non-member producers including Russia to cut supplies to curb a supply glut that has built up since 2014 has also boosted prices.

OPEC and its allies have extended the agreement until the end of 2018 and Russia’s Rosneft (ROSN.MM) said on Monday it could be maintained beyond next year.

Reuters