Oil falls as UK North Sea oil pipeline moves closer to
restart
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 [December 21, 2017]
By Dmitry Zhdannikov
LONDON (Reuters) - Oil prices fell on
Thursday after the operator of Britain's Forties pipeline in the North
Sea said it was expected to restart in early January after repairs over
Christmas.
Forties is the largest of the five North Sea crudes that underpin Brent,
a benchmark for oil trading in Europe, the Middle East, Africa and Asia.
Oil prices have risen since the pipeline was shut on Dec 11. But Brent
oil prices <LCOc1> fell after the announcement and were down 15 cents at
$64.41 per barrel at 1225 GMT.
U.S. West Texas Intermediate (WTI) crude futures <CLc1> were at $57.95 a
barrel, down 14 cents from their last settlement.
"Initially a small number of customers will send oil and gas through the
pipeline at low rates as part of a coordinated plan that allows Ineos to
carefully control the flow into the system," operator Ineos said in a
statement.
"Based on current estimates the company expects to bring the pipeline
progressively back to normal rates early in the new year," it said.
The system, which carries around 450,000 barrels per day of crude to
Britain, along with a third of the UK's total offshore natural gas
output, was closed after a routine inspection revealed a crack in an
onshore section.
Ineos on Dec 13 was forced to declare force majeure on deliveries of
Forties crude oil, natural gas and condensate, suspending its
contractual obligations to customers due to circumstances beyond its
control.
The privately owned chemicals company based in Switzerland bought the
pipeline system from BP <BP.L> in late October.
Oil prices were also supported by falling crude inventories in the
United States but capped by output that is fast approaching 10 million
barrels per day, a level only surpassed by Saudi Arabia and Russia.
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A gas station attendant pumps fuel into a customer's car at a gas
station in Shanghai, China November 17, 2017. REUTERS/Aly Song
Both crudes gained around 1 percent during their previous sessions, lifted by
official data showing a 6.5 million-barrel fall in U.S. crude inventories <C-STK-T-EIA>
in the week to Dec. 15 to 436 million barrels, the lowest level since October,
2015.
Countering this on Thursday was another increase in U.S. crude oil production,
while a rise in gasoline stocks pointed to a slowdown in demand.
"The rally which has defined H2 looks to have run out of steam as the year draws
to a close, and we might be hard pressed to say where further upside can come
from at this point, barring some unforeseen supply outage," JBC Energy said in a
note.
The energy minister of Saudi Arabia, the world's top crude exporter and OPEC's
de-facto leader, said it would take more time to rein in global oversupply,
which was created by strong global production increases in the years up to 2015.
"We expect the first few months of 2018 to be either flat or a build (in
inventories), as it is typically the case with the seasonality in the oil
market," Khalid al-Falih told Reuters on Wednesday.
To view a graphic on U.S. oil production, storage click on this link http://reut.rs/2BRgANA
(Additional reporting by Henning Gloystein; editing by Jason Neely)
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