Nigeria Strike and Force Majeure by Ineos support crude

SINGAPORE (Reuters) – Oil prices rose on Monday amid an ongoing North Sea pipeline outage and because a strike by Nigerian oil workers threatened its crude exports.

Signs that booming U.S. crude output growth may be slowing also supported crude prices, although the 2018 outlook still points to ample supply despite production cuts led by OPEC.

Brent crude futures LCOc1, the international benchmark for oil prices, were at $63.72 a barrel at 0821 GMT, up 49 cents, or 0.8 percent, from their last close.

Signs that booming U.S. crude output growth may be slowing also supported crude prices, although the 2018 outlook still points to ample supply despite production cuts led by OPEC.

Brent crude futures LCOc1, the international benchmark for oil prices, were at $63.72 a barrel at 0821 GMT, up 49 cents, or 0.8 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $57.70 a barrel, up 40 cents, or 0.7 percent.

The higher prices came on the back of a strike by Nigerian oil workers and the ongoing North Sea Forties pipeline system outage, which provides crude that underpins the Brent benchmark.

 North Sea operator Ineos 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 Nigeria, 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, potentially hitting the country’s production and exports.

“Oil prices are getting a bounce… as the Nigerian oil union talks have hit an impasse and will begin strike action,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA.

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 Dec. 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, and actual U.S. production C-OUT-T-EIA has soared by 16 percent since mid-2016 to 9.8 million barrels per day (bpd).

Reuters

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Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes