Oil Holds Below $65 After Volatile Week Caused by Pipeline Woes

Futures rose 0.2 percent, leaving prices in London little changed on the week. They jumped above $65 for the first time since 2015 earlier on Tuesday after the Forties pipeline in the U.K. shut down because of a crack. Those gains were eroded as the International Energy Agency’s voiced doubts the market would fully rebalance in 2018, diverging from the view of OPEC.

“It’s been volatile,” Torbjorn Kjus, analyst at DNB Bank ASA, said by phone. If the Forties pipeline is “out for a month, it should have a positive effect” on prices as 10 million barrels of oil supply could easily be lost to the market.

The pipeline halt further boosted prices after the Organization of Petroleum Exporting Countries and its allies including Russia had already to extend their production curbs until the end of 2018. Yet doubts persist about whether another 12 months of cuts will finally eliminate the inventory surplus that’s weighed on the market for three years.

The Forties halt forced Ineos, the operator of the pipeline, to declare force majeure, a contractual term that allows it to miss deliveries due to events beyond its control. That’s the first time in nearly 30 years that such a condition has been declared in the North Sea, according to Gary Ross, founder of PIRA Energy, now part of S&P Global Platts.
more detail at: https://www.bloomberg.com/news/articles/2017-12-14/oil-heads-for-weekly-loss-as-opec-cuts-seen-challenged-by-supply