NEW YORK (Reuters) – Oil prices were up slightly on Thursday as a pipeline outage in Britain continued to lift Brent crude prices.
U.S. West Texas Intermediate futures rose 16 cents, or 0.3 percent, to $56.76 a barrel.
Brent crude futures were up 47 cents, or 0.8 percent, at $62.91 a barrel at 11:49 a.m. (1649 GMT).
Prices have been supported by an outage on the Forties crude pipeline that was expected to last several weeks. Operator Ineos declared force majeure on crude oil, gas and condensate deliveries from the pipeline, a source familiar with the matter told Reuters on Wednesday.
“At present you can’t ignore the impact of the Forties pipeline outage,” said John Kilduff, partner at Again Capital Llc in New York, “It’s a significant amount of oil that the market is going to miss and is missing. And it’s almost surprising it’s not generating more support.”
A fall in U.S. crude inventories last week also lent some support. Stocks fell by 5.1 million barrels in the week to Dec. 8, the fourth consecutive week of decline, to 442.99 million barrels, the lowest since October 2015.
The front month of the U.S. crude curve for February and March remains in backwardation. Crude backwardation, in which the futures contract trades below the crude oil’s expected spot price at the contract’s maturity, is an indicator of a tight market.
The Paris-based International Energy Agency (IEA) expects the oil market to have a surplus of 200,000 barrels per day (bpd) in the first half of next year before reverting to a deficit of about 200,000 bpd in the second half. That means 2018 overall should show “a closely balanced market”.
The IEA said U.S. crude output next year would increase by 870,000 barrels per day, up from its November forecast of 790,000 bpd.
The change mirrors upward revisions issued by the Organization of the Petroleum Exporting Countries (OPEC) and the U.S. government.
“The IEA underlined the same take that the U.S. Energy Department had the day before yesterday and OPEC had yesterday,” said Bjarne Schieldrop, chief commodities analyst with SEB Bank, adding that further upward revisions might follow.
With cash pouring into the U.S. shale oil industry, the United States is on track to deliver up to 80 percent of the world’s oil production gains through 2025, the IEA estimates.
OPEC revised its estimate for U.S. oil output growth for 2018 to 1.05 million bpd, while the U.S. Energy Information Administration increased its growth forecast to 780,000 bpd..
A reformer was shut on Thursday after a fire in the East Plant at Citgo Petroleum Corp’s [PDVSAC.UL] 157,500-bpd Corpus Christi, Texas, refinery, said sources familiar with plant operations.