- Crude oil prices settled with slight gains, overcoming earlier losses after Ineos, the operator of the Forties pipeline in the North Sea, said it expected to restart in early January following repairs over the Christmas holidays.
- WTI crude closed +0.4% at $58.36/bbl for a nearly three-week high, while Brent settled +0.5% at $64.91/bbl, and the energy group (XLE +2.1%) easily led all S&P 500 sectors.
- Today's trade was highlighted by "the ability of the complex to absorb in orderly fashion reports that the North Sea Forties pipeline system will be restarted,” says Jim Ritterbusch of the Ritterbusch & Associates energy advisory firm.
- The pipeline outage has helped widen the gap between Brent and WTI, which could mean that U.S. prices have more room to run and could hit $60/bbl sooner than expected, Ritterbusch says.
- The Forties pipeline, which handles ~45% of U.K. liquids production, was shut down on Dec. 11 after a crack was discovered in an onshore section in Scotland.
- But oil prices continue to be supported in part by falling crude inventories in the U.S., as data showed a 6.5M bbl drop to 436M barrels, the lowest since October 2015.
- ETFs: USO, OIL, UWT, UCO, DWT, SCO, BNO, DBO, DTO, USL, DNO, OLO, SZO, OLEM, WTIU, OILK, OILX, WTID, USOI
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