Crude Prices Gain Ground

Oil prices rose on Wednesday as industry data showed a larger-than-expected drawdown in US crude stockpiles, while expectations for an extended shutdown of a major North Sea crude pipeline also continued to bolster markets.

Brent crude was up 69 cents, or 1.1%, at $64.03 a barrel. It had settled down $1.35, or 2.1%, on Tuesday on a wave of profit-taking after news of a key North Sea pipeline shutdown helped send the global benchmark above $65 for the first time since mid-2015, CNBC reported.

US West Texas Intermediate crude was up 45 cents, or 0.8%, at $57.59 a barrel.

Britain’s biggest pipeline from its North Sea oil and gas fields is likely to be shut for several weeks for repairs, its operator said on Tuesday.

The pipeline, which carries about 450,000 barrels per day of Forties crude, was shut after cracks were found. It has particular significance to global markets because Forties is the largest out of the five crude oil streams that underpin the dated Brent benchmark.

A number of producers, including BP and Royal Dutch Shell, said they had closed down oilfields in response.

“Four weeks is much longer than most projections,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting in Tokyo. “The pipeline incident came just when the markets are tightening on coordinated production cuts.”

After settlement on Tuesday, industry group the American Petroleum Institute said crude stocks in the United States fell by 7.4 million barrels last week. That is almost twice the decline of analysts’ expectations for a drop of 3.8 million barrels.

Gasoline stocks rose by 2.3 million barrels, compared with analysts’ expectations in a Reuters poll for a 2.5-million-barrel gain. Distillate fuels stockpiles, which include diesel and heating oil, rose by 1.5 million barrels, compared with expectations for a 902,000-barrel gain, the API data showed.

The US government’s Energy Information Administration releases its weekly oil report on Wednesday.

Selling had gained pace on Tuesday after the US Energy Information Administration said in its monthly short-term energy outlook that US crude oil output will rise by 780,000 barrels per day to a record high of 10.02 million bpd in 2018.

UAE Energy Minister Suhail al-Mazroui said on Wednesday it was premature to talk about an exit strategy from the current global supply cut agreement between OPEC and non-OPEC producers.