North Sea Pipeline, Dropping U.S. Stocks Support Prices
North Sea Forties pipeline shut due to crack; U.S. crude oil inventories expected to fall further.
Brent crude prices steadied on Wednesday while WTI futures edged higher, supported by expectations of a fall in U.S. inventories and the continued outage of the North Sea Forties pipeline system.
Brent crude futures, the international benchmark for oil prices, were at $63.81 a barrel at 1047 GMT, up 1 cent from their previous close.
U.S. West Texas Intermediate (WTI) crude futures were up 21 cents at $57.77 a barrel.
"The API is the reason why the energy complex is slightly up this morning," said Tamas Varga, analyst with PVM Oil Associates. The American Petroleum Institute said on Tuesday that U.S. crude inventories fell by 5.2 million barrels in the week to Dec. 15 to 438.7 million.
Official U.S. government data from the Energy Information Administration (EIA) is due later on Wednesday.
Oil prices have also been supported by the continuing outage of Britain's Forties pipeline in the North Sea, which delivers crude underpinning Brent futures.
Operator Ineos said repairs to the pipeline were underway on Wednesday after a crack was found that closed the pipeline on December 11. Ineos has a timescale of two to four weeks for the repairs starting from December 11.
Goldman Sachs said on Wednesday it forecasts global oil inventories will have rebalanced by mid-2018, "leading to a gradual exit from the cuts and increases in OPEC and Russia production through second half 2018".
The bank added that the ramp-up in OPEC production and rising non-OPEC output "will leave risks skewed to lower prices" in the second half of next year.
OPEC and ten other producers led by Russia extended an agreement to cut oil production but some 1.8 million bpd on November 30 until the end of next year.
The alliance is targeting the elimination of an oil glut to bring back inventories in the developed world back to the moving five-year average.
Traders said rising U.S. crude production <C-OUT-T-EIA>, which has soared by 16 percent since mid-2016 to 9.8 million bpd, was capping prices.
"Expectations of higher U.S. shale production into January hamstrung crude's price increase," said Jeffrey Halley, senior market analyst at futures brokerage Oanda in Singapore.
Most analysts expect U.S. output to break through 10 million bpd soon, which would be a new record and take it to levels on par with top exporter Saudi Arabia and close to top producer Russia, which pumps around 11 million bpd.
By Ahmad Ghaddar
