Oil Rises After North Sea Pipeline Disruption

Oil prices jumped to their highest in more than two years on Tuesday after the shutdown of a North Sea pipeline knocked out significant supply from an already tightening market.

World stocks took a break from a three-day rally.

Brent crude futures, the global benchmark for oil prices, rose above $65 a barrel — their highest since mid-2015 — after Britain’s Forties pipeline was shut due to cracks as a cold snap sweeps the country. [O/R]


West Texas Intermediate graph

The Forties pipeline is important for the global oil market because the crude it carries normally sets the price of dated Brent, a benchmark used to price physical crude around the world and which underpins Brent futures.

The shutdown comes as oil supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) have helped chip away an excess of inventories built up following a global supply glut which began to emerge in late 2014.

“The disruption to Forties is not just about missing barrels, it is also about losing a key component for the main seaborne crude oil benchmark,” said Olivier Jakob, analyst at Petromatrix.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza
Alfonso Esparza

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