(Bloomberg) -- Brent crude closed at its highest in more than two years as shrinking U.S. stockpiles allay concerns over a global glut, while a key North Sea oil pipeline remains shut.
In New York, futures closed at their highest in two weeks. Crude stockpiles last week plunged by the most since the height of North America’s summer driving season, a government report showed Wednesday. Meanwhile, Ineos Group’s Forties Pipeline System, which hauls oil from North Sea fields and helps set international prices, has been shut since Dec. 11 after a hairline crack was discovered.
Bullish sentiments linger among traders following the “bigger-than-expected inventory draw,” said Rob Haworth, who helps oversee $150 billion at U.S. Bank Wealth Management in Seattle. “That’s still on the minds of market participants.”
Oil is set to post a yearly advance following a decision by the Organization of Petroleum Exporting Countries and its allies to press on with supply curbs through the end of 2018. Russian President Vladimir Putin and Saudi Arabia’s King Salman Bin Abdulaziz agreed on the need to continue cooperating to maintain energy market stability, the Kremlin said in a statement. The Forties shutdown boosted prices up a notch.
Ineos said it’s making preparations to restart the Forties network that snakes across the sea floor and delivers crude to the U.K. mainland. Normal operations probably will resume in early January, the company said.
Brent for February settlement added 34 cents to end the session at $64.90 on the London-based ICE Futures Europe exchange. The global benchmark traded at a premium of $6.54 to WTI.
West Texas Intermediate for February delivery gained 27 cents to settle at $58.36 a barrel on the New York Mercantile Exchange. Total volume traded was about 50 percent below the 100-day average.
“We’ve had a nice run up based on the combination of bullish forecasts, crude inventory declines and problems in the North Sea,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said by telephone. “More likely, we’ll see the pipeline coming back on, so people figure take your profits before year end.”
Oil-market news:
- OPEC shipments will climb by 200,000 barrels a day to 25.71 million in the four weeks to Jan. 6 versus the period to Dec. 9, according to tanker-tracker Oil Movements.
- Analysts and traders are bullish on WTI futures, according to a Bloomberg survey.
- The U.S. could flip to a net energy exporter before 2025 as domestic oil and gas output continues to expand, according to Bank of America Merrill Lynch (NYSE:BAC).
