Brent Rises Toward $64

Oil edged up towards $64 a barrel on Tuesday, supported by the Forties pipeline outage in the North Sea, OPEC-led supply cuts and expectations that US crude inventories fell for a fifth week.

Brent crude, the global benchmark, was up 34 cents to reach $63.75 a barrel. US crude also gained 34 cents to $57.50, CNBC reported.

Rising output in the United States put a lid on gains, however. Shale production will rise to a record in January, according to a government forecast published on Monday, as higher prices encourage companies to pump more.

The unplanned shutdown of Forties since last week has supported Brent in particular, as Forties is the largest of the North Sea crude grades underpinning the benchmark. Brent reached $65.83, its highest since mid-2015, on Dec. 12.

“This should ensure buying pressures remain at the fore of the Brent structure until the turn of the year at the very least,” said Stephen Brennock of oil broker PVM.

Ineos, operator of the Forties pipeline, said on Tuesday it was moving forward with a preferred repair option and the timeframe for the fix remained two to four weeks starting from Dec. 11, the date of the shutdown.

A deal by the Organization of Petroleum Exporting Countries and non-member producers, including Russia, to cut supplies in an attempt to get rid of a supply glut that has built up since 2014 has also boosted prices.

OPEC and its allies have extended the agreement until the end of 2018 and Russia’s Rosneft said on Monday it could be maintained beyond next year.

As a result of the cuts, oil inventories are falling globally and the latest weekly supply reports are expected to show a further reduction in US crude inventories.

Still, rising US production is countering OPEC’s cuts and other supply losses.

US shale output in January is forecast to increase by 94,000 barrels per day to 6.41 million bpd, according to EIA’s monthly drilling productivity report.

“The US shale oil report issued late yesterday is on the bearish side, as it confirms an acceleration in US production,” said Olivier Jakob, analyst at Petromatrix.

That forecast follows an EIA prediction last week that total oil production, including non-shale, will grow by 780,000 bpd to a record 10.02 million bpd in 2018.