Repairs to Forties Pipeline System will take about two weeks
No need to tap emergency reserves: International Energy Agency Fears subsided that a hairline crack in one of the world’s most important oil pipelines would choke supplies, pulling crude lower.
The global benchmark Brent crude slipped from a two-year high and West Texas Intermediate oil also edged lower in New York. The Forties Pipeline System that funnels North Sea oil to the U.K. mainland was shut on Monday after a crack was discovered, and repairs may take weeks. The International Energy Agency sought to calm jittery nerves, saying the oil market remains well supplied.
The short timespan for the repair work “might be tempering the initial fears,” Gene McGillian, a market research manager at Tradition Energy in Stamford, Connecticut, said by telephone.
Brent soared to levels last seen in June 2015 on Monday after news broke of the Forties outage. Prices have been trending higher on the strength of an agreement by the Organization of Petroleum Exporting Countries and allied producers such as Russia to extend supply cuts through all of next year. Still, the OPEC-led accord faces a threat from U.S. shale drillers who’ve lifted production to record highs.
Brent for February settlement fell by 14 cents to $64.55 a barrel on the London-based ICE Futures Europe exchange. The benchmark traded at a premium of $6.69 to February West Texas Intermediate after touching $7.35.
See also: Canadian Oil Collapses Amid Pipeline and Rail Bottleneck
WTI for January delivery fell 20 cents to $57.79 at 9:53 a.m. on the New York Mercantile Exchange. Total volume traded was about 55 percent above the 100-day average.
The supplies that flow through the Forties Pipeline System are the single largest constituent of so-called Dated Brent crude that is used to settle more than half of the world’s physical oil prices. The pipeline shutdown forced Apache Corp. to suspend operations at its nearby Forties field.
In the U.S., crude stockpiles probably dropped by 2.89 million barrels last week, according to a Bloomberg survey prepared in advance of a government report scheduled for release on Wednesday. Inventories at the key pipeline hub in Cushing, Oklahoma, probably slid by 2.5 million barrels, a separate forecast compiled by Bloomberg showed.
The industry-funded American Petroleum Institute is scheduled to release its stockpile data on Tuesday.
Kuwait will start selling Super Light crude oil in April when production reaches 120,000 barrels a day, according to person with direct knowledge of the matter.
Protesters in Nigeria’s southern Niger River delta stopped work at three oil wells operated by Eni SpA’s Nigerian unit, their representatives said.
— With assistance by Ben Sharples, and Grant Smith