Crude Oil Prices Settled Higher After Forties Pipeline Shutdown

Investing.com – Brent oil prices settled sharply higher on Monday amid supply disruptions after a major North Sea pipeline shut for repairs, while signs of rising US production capped gains in crude oil prices.

On the New York Mercantile Exchange for January delivery rose 1.1% to settle at $57.99 a barrel, while on London’s Intercontinental Exchange, gained 2.1% to trade at $64.72 a barrel.

The Brent-WTI spread rose to the widest since October, as Brent prices surge after the shutdown of the Forties pipeline, which carries 40% of North Sea oil and gas, sparked expectations of tightening supply.

The shutdown comes four days after the pipeline operating capacity was cut following reports of “small” leak last week.

In the U.S., meanwhile, gains in the WTI crude oil futures were somewhat capped amid signs of growing output from US producers.

The number of oil rigs operating in the US rose for the third consecutive week, said oil field services company Baker Hughes on Friday.

The weekly rig count is an important barometer for the drilling industry and serves as a proxy for oil production and oil services demand. A higher rig count tends to signal a further rise in U.S. production.

Earlier in the session oil prices shrugged off somewhat bearish comments from UAE Energy Minister Suhail bin Mohammed al-Mazroui, who said OPEC and non-OPEC producers plan to announce in June an exit strategy from global supply cuts but stressed that the pact would not end by then.

“We will announce … a strategy in the June meeting. That does not mean we will exit in June. That means we will come up with a strategy,” Mazroui told reporters in Abu Dhabi.

The rise in crude oil prices comes against a backdrop of growing bearish bets on oil as CFTC data on Friday showed WTI net shorts increased for an eighth-week straight week to a fresh record, rising 1% to 594,256 contracts.

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