Oil prices edged higher on Monday, supported by a pipeline outage in the North Sea, as well as a strike by workers in the Nigerian energy industry.
Still, growth in US crude output cast a shadow over the market and continued to cap gains.
Brent crude futures, the international benchmark, were up 27 cents at $63.50 a barrel at 11.45am EST (1645 GMT). US crude futures rose 14 cents to $57.44.
Brent had traded as high as $63.91 earlier in the day but fell back after Ineos, operator of the North Sea Forties pipeline, said the crack that shut it down had not spread.
“The Forties pipeline outage is continuing to be supportive of the market,” said John Kilduff, partner at Again Capital. “We’re just watching this as to see how the market reacts to not having these barrels available.”
Brent fell back after Ineos said the crack that shut it down
had not spread
The 450,000-barrel-per-day link that provides some of the physical crude underpinning Brent has been shut since December 11, forcing Ineos to declare force majeure on all oil and gas shipments from it last week.
“There is still no reliable information about how long the repair work will last and when the pipeline will go back into operation,” Commerzbank said in a note. “This should preclude any fall in the Brent price for the foreseeable future.”
Workers from one of Nigeria’s largest oil unions went on strike yesterday, sparking concerns over exports from Africa’s largest crude producer.
The Petroleum and Natural Gas Senior Staff Association of Nigeria, whose members mainly work in the upstream oil industry, said they were holding talks with labour ministry officials over the indefinite strike.
US production has soared 16 per cent since mid-2016 to 9.8 million bpd, approaching output of Saudi Arabia’s 10 million bpd and Russia’s 11 million bpd.
This has undermined market-balancing efforts by the Organization of the Petroleum Exporting Countries and a group of non-OPEC producers, including Russia, to withhold production.
Largely because of rising US shale output, the International Energy Agency said global oil markets would show a supply surplus of about 200,000 bpd in the first half of 2018.
The US Energy Information Administration showed a similar surplus for that period and indicated a supply overhang of 167,000 bpd 2018.