Oil prices dip in Monday trading
Oil prices were mixed Monday as the Nigerian oil workers’ strike and uncertainty over when the Forties pipeline will re-open were tempered by rising US crude output.
By 1:17 p.m. EST, Brent was down 2 cents to $62.63/barrel and US WTI had fallen 34 cents to $56.99/barrel. The Canadian Crude Index had fallen to $34.01.
According to Reuters, Brent had traded as high as $63.91 earlier in the day, but fell after INEOS, the operator of the Forties pipeline, reported that a crack that had shut down the UK pipeline had not spread.
“We are currently monitoring the pipeline and working through some of the solutions for repair,” INEOS spokesman Richard Longden told Reuters.
In an interview with Reuters, John Kilduff, partner at Again Capital, said “The Forties pipeline outage is continuing to be supportive of the market.” He added “We’re just watching this as to see how the market reacts to not having these barrels available.”
The company declared a force majeure on all oil and gas shipments from the Forties 450,000 barrel per day (b/d) pipeline.
“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”.
Also underpinning oil prices was a strike by workers represented by of one of Nigeria’s largest oil unions, the Petroleum and Natural Gas Senior Staff Association of Nigeria.
Reuters reports that the union agreed to suspend the strike late in the day on Monday. The president of the union said the dispute resolution ended after a domestic oil and gas company agreed to recall laid off staff.
“Management agreed to unconditionally recall the sacked staff and take steps to allow their employees to be members of the union,” Francis Johnson, the president of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) told Reuters.
Johnson said that the union could go on strike again if “anti-union postures” shown by other domestic oil companies were not addressed by the third week of January. He warned of a “full blown industrial crisis” if the union was unsatisfied by the companies’ efforts.
The booming US oil industry which has seen output rise by 16 per cent since mid 2016 is undermining OPEC efforts to cut the global glut of crude.
The International Energy Agency said despite rising demand for crude, global oil markets will continue to show a surplus of about 200,000 b/d in the first half of 2018.
Data from the US Energy Information Administration forecasts a supply overhang of 167,000 b/d for all of 2018.
