Oil prices up slightly despite January restart of UK pipeline

Oil prices rose slightly on Thursday, but traders remain concerned about rising US production. Statoil photo.

Oil prices lifted by 6.5 million barrel drop in US crude stocks

Oil prices rebounded from earlier losses Thursday despite reports from Ineos, the company that operates the Forties pipeline, that it expects to reopen the shuttered pipeline in early January.

By 5:15 p.m. EST, Brent had risen by 17 cents to $64.28 and US WTI was up 14 cents to $58.23/barrel. The Canadian Crude Index rose to $34.30.

According to Reuters, Forties is the largest of the five North Sea crudes that underpin Brent. Since the shutdown of the 550,000 barrel per day pipeline on Dec. 11, oil prices have risen, but after the announcement on Thursday, prices dropped by 28 cents to $64.28/barrel by 1444 GMT.

Ineos said in a statement that when the pipeline reopens, “a small number of customers will send oil and gas through the pipeline at low rates as part of a coordinated plan that allows Ineos to carefully control the flow into the system.”

“Based on current estimates the company expects to bring the pipeline progressively back to normal rates early in the new year,” it said.

Oil prices were also supported by declining US crude stocks. On Wednesday, data from the US Energy Information Administration showed inventories had fallen by 6.5 million barrels in the week ending Dec. 15.

At 436 million barrels, US crude inventories are now at their lowest since October, 2015.

However, US crude production is on the rise along with gasoline inventories.

“The rally which has defined H2 looks to have run out of steam as the year draws to a close, and we might be hard pressed to say where further upside can come from at this point, barring some unforeseen supply outage,” Reuters reports JBC Energy said in a note.

Saudi Arabia’s energy minister Khalid al-Falih said he believes it will take more time to balance the oil market.

“We expect the first few months of 2018 to be either flat or a build (in inventories), as it is typically the case with the seasonality in the oil market,” Falih told Reuters on Wednesday.