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Oil prices hold steady on competitive data, North Sea outage

16 December 2017

The price for Brent crude oil, the global benchmark for the price of oil and a component of the basket of oils carried by the Forties system, was up 0.28 percent as of 9:15 a.m. EST to $63.52 per barrel.

Brent crude oil prices jumped - by one percent - above $65 per barrel on Tuesday to their highest since mid-2015, after the shutdown of the Forties North Sea pipeline knocked out significant supplies from a market that was already tightening due to OPEC-led production cuts.

"At this stage it is still too early to say how long the fix will take to complete, but it is expected to be a matter of weeks rather than days", Ineos said, adding that a number of fix options were now being assessed and developed.

The remaining gas supplies produced in United Kingdom waters are connected to the mainland by the Forties pipeline which stretches over 100 miles long and has been responsible for delivering gas and crude to meet around 40pc of Britain's needs for the last 42 years.

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This poses challenges for OPEC's hope of draining global stocks.

"After the initial surge that understandably accompanies such a major supply disruption, the market has settled down again and, unless another dramatic event occurs in what remains of 2017, it looks as if the Brent crude price will average about US$54 a barrel for the year, an increase of twenty percent on 2016".

The Forties pipeline was sold-off by BP to Ineos only six weeks ago in a sale which rankled critics of the privately-owned company.

"We see the spate of supply projects, excluding OPEC countries and the developments in USA shale, taking their toll on the market and keeping prices in check next year", analysts at consultancy JBC Energy wrote in a note. Stocks fell by 5.1 million barrels in the week to December 8, the fourth consecutive week of decline, to 442.99 million barrels, the lowest since October 2015.

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Total also produces about 55,000 bpd of oil from the field. Russia's Urals and the UAE's Murban are some of the alternatives to Forties in terms of similar quality.

Traders are watching the spread, or difference, between Brent and WTI closely.

That's according to industry body Oil & Gas UK, which made the comment following INEOS' announcement to close the Forties Pipeline System for fix.

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Oil prices hold steady on competitive data, North Sea outage