|Brent nearly hit upper sixties before retreating to $64|
|By A/S Global Risk Management.
|Updated on 13 Dec 2017 08:48 GMT
|Brent oil price briefly nearly touched the upper sixties yesterday before retracing to current levels of around $64.
Major North Sea pipeline outage along with continued declines in U.S. crude oil stocks contributed to bullish sentiment.
This week's initial oil price rally was likely caused by news of as much as 40% of the UK's North Sea oil and gas production being shut down due to a pipeline leak, reopening period remains uncertain. The Forties pipeline is 235 miles long and has a capacity 445,000 barrels of crude per day.
Furthermore, yesterday, the American Petroleum Institute (API) reported a huge drop in crude oil stocks of 7.5 mio. barrels; increases in gasoline and distillates stocks of 2.3 mio. and 1.5 mio. respectively. Later today, the more closely followed oil inventory report from the Energy Information Administration (EIA) will be published – consensus is a draw of 4 mio. in crude, builds in gasoline and distillates stocks.
Weighing on intraday prices was news of expected considerable increase in U.S. crude oil production. In its monthly report published yesterday, the EIA stated that the U.S. crude oil production is likely to increase by 780,000 barrels per day next year to 10 mio. barrels per day. U.S. crude oil production is up 360,000 barrels per day in November compared to October. In October, production was somewhat disrupted due to hurricanes.
Today, UK employment data is published along with U.S. central bank statement and (potential) interest rate hike. Tonight, Chinese and Japanese industrial production is published.
We could see some additional volatility in the market today with both the weekly EIA oil stocks report and OPEC's monthly oil market report being published today.
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