Oil nears recent high on tighter supplies

Unscheduled outage at North Sea field boosts prices

Oil climbed to a near one- month high on Wednesday on signs of a gradual tightening in global oil inventories and on concerns about a supply outage at a field in the UK’s North Sea that feeds into an international benchmark price.

Global benchmark Brent crude had risen 50 cents to $ 54.67 a barrel by 4: 37 pm Beijing time. It reached $ 54.80 intraday, the highest since March 8. US crude was up 47 cents at $ 51.50.

“The immediate reason for the move was an unplanned production outage in the North Sea,” said Sukrit Vijayakar, director of energy consultancy Trifecta, referring to an unplanned production outage at the Buzzard oil field in the North Sea.

Buzzard produces about 180,000 barrels per day. It is the largest contributor to the Forties crude stream that is a key component of the physical Brent oil price that the Brent futures contract settles against.

Traders also said that prices gained amid slowly tightening market conditions, with the Organization of the Petroleum Exporting Countries ( OPEC) leading an effort to cut output.

With most of OPEC’s crude exported on tankers, tracking ships can be a good gauge of market conditions.

Shipped oil supplies have fallen by as much as 17 percent this year, according to oil analysis firm Vortexa.

“We have seen a significant reduction in global oil supply since January, with oil on water going from 978 million barrels on January 1 to 812 million barrels on April 3,” said Vortexa chief executive Fabio Kuhn. “These changes are a signal that the rebalancing is happening faster than many in the market believe.”

Trading data in Thomson Reuters Eikon show that OPEC shipments to the rest of the world fell to 813.7 million barrels by the end of March from 796.6 million barrels in January.

Still, a rise in output in the US – prompted in part by higher prices resulting from the OPEC- led cut – is likely to provide headwind for prices, analysts said.

US drillers added oil rigs for an 11th week in a row, energy services firm Baker Hughes said on Friday, as energy companies boost spending on new production.