Oil prices rise on ongoing North Sea outage, Nigeria strike

By Henning Gloystein

SINGAPORE (Reuters) – Oil prices rose on Monday amid an ongoing North Sea pipeline outage and because a strike by Nigerian oil workers threatened its crude exports.

Signs that booming U.S. crude output growth may be slowing also supported crude prices, although the 2018 outlook still points to ample supply despite production cuts led by OPEC.

Brent crude futures (), the international benchmark for oil prices, were at $63.72 a barrel at 0821 GMT, up 49 cents, or 0.8 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures () were at $57.70 a barrel, up 40 cents, or 0.7 percent.

The higher prices came on the back of a strike by Nigerian oil workers and the ongoing North Sea Forties pipeline system outage, which provides crude that underpins the Brent benchmark.

North Sea operator Ineos declared force majeure on all oil and gas shipments through its Forties pipeline system last week after cracks were found.

“The force majeure … is acting as a major prop for crude,” said Sukrit Vijayakar, director of energy consultancy Trifecta.

In Nigeria, the Petroleum and Senior Staff Association of Nigeria, whose members mainly work in the upstream oil industry, started industrial action on Monday after talks with government agencies ended in deadlock, potentially hitting the country’s production and exports.

“Oil prices are getting a bounce… as the Nigerian oil union talks have hit an impasse and will begin strike action,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA.

In the United States, energy companies cut rigs drilling for new production for the first time in six weeks, to 747, in the week ended Dec. 15, energy services firm Baker Hughes said on Friday.

Despite the dip in drilling, activity is still well above this time last year, when the rig count was below 500, and actual U.S. production has soared by 16 percent since mid-2016 to 9.8 million barrels per day (bpd).

This means U.S. output is fast approaching that of top producers Saudi Arabia and Russia, which are pumping 10 million bpd and 11 million bpd respectively.

The rising U.S. output also undermines efforts by the Organization of the Petroleum Exporting Countries (OPEC), which is de facto led by Saudi Arabia, and a group of non-OPEC producers including Russia to withhold production to tighten the market and prop up prices.

Largely because of rising shale output from the United States, the International Energy Agency said global oil markets would show a slight supply surplus of around 200,000 bpd during the first half of 2018.

Data from the U.S. Energy Information Administration showed a similar surplus for that period and still indicates a supply overhang of 167,000 bpd for all of 2018.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.