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Oil prices rose on Monday amid an ongoing North Sea pipeline outage and signs that booming US crude output growth may be slowing, although the 2018 outlook points to ample supply despite production cuts led by OPEC.
US West Texas Intermediate (WTI) crude futures were at $57.66 a barrel at 0634 GMT, up 36 cents, or 0.6 per cent, from their last settlement. Brent crude futures , the international benchmark for oil prices, were at $63.59 a barrel, up 36 cents, or 0.6 per cent, from their last close.
Forties pipeline outage
Traders said the slightly higher prices came on the back of the North Sea Forties pipeline system outage, which provides crude that underpins the Brent benchmark, as well as indicators that US oil production growth may be slowing.
North Sea operator Ineos had declared force majeure on all oil and gas shipments through its Forties pipeline system last week after cracks were found. “The force majeure ... is acting as a major prop for crude," said Sukrit Vijayakar, director of energy consultancy Trifecta.
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 had said on Friday.
Despite this dip in drilling, activity is still well above this time last year, when the rig count was below 500, and actual US production has soared by 16 per cent since mid-2016 to 9.8 million barrels per day (bpd). This means US output is fast approaching that of top producers Saudi Arabia and Russia, which are pumping 10 million bpd and 11 million bpd respectively.
The rising US output also undermines efforts by the Organization of the Petroleum Exporting Countries (OPEC), which is de facto led by Saudi Arabia, and a group of non-OPEC producers including Russia to withhold production to tighten the market and prop up prices.
Largely because of rising shale output from the United States, the International Energy Agency (IEA) said global oil markets would show a slight supply surplus of around 200,000 bpd during the first half of 2018. Data from the US Energy Information Administration (EIA) showed a similar surplus for that period and still indicates a supply overhang of 167,000 bpd for all of 2018.
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