Oil rises after UK North Sea oilfield outage
By Christopher Johnson
Oil prices rose on Thursday after a power outage closed the UK’s largest oilfield, restricting flows to the North Sea’s main oil stream that underpins the global benchmark Brent crude.
Oil prices were also supported by data on Wednesday that showed a fall in U.S. crude inventories.
Brent crude for August was up 55 cents at $57.60 a barrel by 1035 GMT (6:35 a.m. EDT). U.S. light crude , also known as West Texas Intermediate or WTI, was up 30 cents at $51.71.
Britain’s Buzzard oilfield, which normally pumps 170,000 to 180,000 barrels per day, was closed after power supplies failed, traders said. A spokeswoman for Buzzard operator Nexen, a unit of China’s CNOOC <0883.HK>, declined to comment.
“There was a trip last night,” said one crude oil trader, who declined to be identified.
Buzzard is the single biggest contributor to the Forties crude stream, one of four crude grades underpinning the price of over-the-counter Brent, which is linked to Brent futures.
Brent’s front-month August futures contract, due to expire later on Thursday, moved to a premium of 30 cents a barrel above the September contract on the Buzzard news, its highest premium for more than two months.
U.S. crude inventories fell by 4.3 million barrels last week, according to the Energy Information Administration (EIA), as refineries boosted throughput to a record level.
The data suggested demand in the United States, the world’s biggest oil consumer, was holding up well and still absorbing fuel at a time of ample global production.
Olivier Jakob, head of Swiss energy consultancy Petromatrix, said U.S. oil demand remained very strong, driven by gasoline consumption, which was helping keep U.S. refineries working at full tilt through the northern hemisphere summer.
But the market might not be quite as well balanced later in the year, when maintenance shuts some refineries.
“U.S. crude oil stocks are still at a high level and at risk of seeing increasing builds once refineries go into maintenance in the fall,” Jakob said.
Oil prices have fallen steadily over the last two months and both crude benchmarks are down more than 15 percent from June peaks.
The Organization of the Petroleum Exporting Countries is producing about 2.5 million barrels per day (bpd) more crude than needed at the moment, analysts say, filling inventories worldwide and keeping markets under pressure.
OPEC oil supply may be about to rise as Iran increases output following a deal with six global powers over its nuclear program.