On Tuesday, oil moved towards $64 a barrel which was supported by a North Sea pipeline outage, OPEC supply cuts and the probability that U.S. crude inventories dropped for the fifth week.
The increased output in the United States has put a cap on gains. Shale production will hit a new record in January, according to a government forecast, as boosted prices inspire increased pumping by companies. Brent crude, the global benchmark, was up 30 cents to $63.71 a barrel at 1259 GMT. U.S. crude was up 37 cents to $57.53.
Last week’s halt of the North Sea’s Forties pipeline has supported Brent, as the pipeline is the largest of the five crude grades reinforcing the benchmark. Brent hit $65.83 on Dec. 12, its highest since 2015.
“This should ensure buying pressures remain at the fore of the Brent structure until the turn of the year at the very least,” said Stephen Brennock an oil broker.
Ineos, who operates the Forties pipeline, stated it was progressing with an option for repair and the timeframe remains between two to four weeks starting from the date it was shut down.
Oil gained following reports of a missile being fired at the capital of Saudi Arabia from Yemen. Saudi Arabia had stopped the missile and no casualties were reported.
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“The market has not been doing very much and you do have headlines etcetera, but it doesn’t really change anything,” said Olivier Jakob, an analyst.
A deal by the Organization of the Petroleum Exporting Countries and non-member producers including Russia to cut supplies to control the oversupply that has accumulated over the past three years supported oil gains. The OPEC and allies extended the agreement until the end of 2018.
The cuts have dented global inventories and the most current supply reports are anticipated to reveal an increased drop in U.S. crude inventories. The American Petroleum Institute’s report is due on Tuesday at 2130 GMT.