Oil prices rose on Monday supported by a North Sea pipeline outage and a Nigeria’s oil worker strike.
While a fall in the number of U.S. rigs drilling for oil also underpinned prices, growth in U.S. crude output cast a shadow over the market.
Brent crude futures LCOc1, the international benchmark, were at $63.48 a barrel at 1054 GMT, up 25 cents from their last close.
U.S. West Texas Intermediate crude futures CLc1 were at $57.61 a barrel, up 31 cents.
The strike by Nigerian oil workers created concerns over exports from Africa’s largest crude producer.
The oil union, Petroleum and Natural Gas Senior Staff Association of Nigeria (Pengassan), said it began an indefinite strike to protest unfair labour practices at a local petroleum-exploration company.
The union, which represents managerial employees in the oil industry, stopped working after talks late Sunday between its leaders, Nigeria’s labor minister and officials of Neconde Energy Ltd. to avert the action were deadlocked, Babatunde Oke, a spokesman for the Petroleum and Natural Gas Senior Staff Association of Nigeria, or Pengassan, said by phone today from Lagos, the commercial capital, according to Bloomberg. Talks will resume by 11 a.m. local time, he said.
The shutdown of the North Sea Forties pipeline, a 450,000-barrels-per-day (bpd) link that provides some of the physical crude underpinning Brent, also continued to support.
North Sea operator Ineos declared force majeure on all oil and gas shipments through its Forties system last week after it found a crack on the line.
“The declaration of force majeure highlights the seriousness of this,” said Bjarne Schieldrop, chief commodities analyst with SEB in Oslo, adding that any extension of the outage could further boost prices.
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. Actual U.S. production C-OUT-T-EIA has soared by 16 percent since mid-2016 to 9.8 million bpd.
U.S. output is fast approaching that of top producers Saudi Arabia and Russia, which are pumping 10 million bpd and 11 million bpd respectively.
This has undermined market-balancing efforts by the Organization of the Petroleum Exporting Countries and a group of non-OPEC producers including Russia to withhold production.
Largely because of rising U.S. shale output, the International Energy Agency said global oil markets would show a supply surplus of around 200,000 bpd in the first half of 2018.
The U.S. Energy Information Administration showed a similar surplus for that period and indicated a supply overhang of 167,000 bpd for all of 2018.
Frontpage December 25, 2017