Oil gains on supply outages

london — Oil rose on Monday, supported by a North Sea pipeline outage and a Nigerian oil worker strike.

While a fall in the number of US rigs drilling for oil also underpinned prices, growth in US crude output cast a shadow over the market.

Brent crude futures, the international benchmark, were at $63.48 a barrel at 1054 GMT, up 25 cents from their last close.

US West Texas Intermediate crude futures were at $57.61 a barrel, up 31 cents.

The strike by Nigerian oil workers created concerns over exports from Africa’s largest crude producer.

The Petroleum and Natural Gas Senior Staff Association of Nigeria, whose members mainly work in the upstream oil industry, started industrial action on Monday after talks with government agencies ended in deadlock.

The shutdown of the North Sea Forties pipeline, a 450,000-barrels-per-day (bpd) link that provides

16% increase in us crude production since mid-2016 to 9.8 million bpd

some of the physical crude underpinning Brent, also continued to support.

North Sea operator Ineos declared force majeure on all oil and gas shipments through its Forties system last week after it found a crack on the line.

“The declaration of force majeure highlights the seriousness of this,” said Bjarne Schieldrop, chief commodities analyst with SEB in Oslo, adding that any extension of the outage could further boost prices.

In the United States, energy companies cut rigs drilling for new production for the first time in six weeks, to 747, in the week ended December 15, energy services firm Baker Hughes said on Friday.

Despite the dip in drilling, activity is still well above this time last year, when the rig count was below 500. Actual US production has soared by 16 per cent since mid2016 to 9.8 million bpd.

US output is fast approaching that of top producers Saudi Arabia and Russia, which are pumping 10 million bpd and 11 million bpd respectively.

This has undermined marketbalancing efforts by the Organisation of the Petroleum Exporting Countries and a group of non-Opec producers including Russia to withhold production.

Largely because of rising US shale output, the International Energy Agency said global oil markets would show a supply surplus of around 200,000 bpd in the first half of 2018. — Reuters