Oil prices firmed Friday, supported by a pipeline outage in the North Sea and ongoing cuts by major producers, but higher forecasts for U.S. output in 2018 from major energy groups this week limited gains.
Continue Reading Below
U.S. crude futures recently rose 31 cents, or 0.54%, to $57.35 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 13 cents, or 0.21%, to $63.44 a barrel on ICE Futures Europe.
Energy markets are "in a state of confusion," analysts at TAC Energy wrote in a client note Friday. The shutdown of the Forties Pipeline System pushed Brent prices to their highest level since June 2015.
But prices have been in a "back and forth pattern" since, the TAC analyst said, amid reports that suggested that supply and demand might not be as tight as some were expecting.
The time frame for a restart of the Forties Pipeline System remained uncertain after owner Ineos discovered a crack in a pipe last week. The outage stops the flow of around 450,000 barrels of North Sea oil a day.
The outage of the pipeline, "which looks set to remain shut for longer than initially thought," is supporting prices, analysts at Commerzbank said in a note.
Continue Reading Below
Production from the Organization of the Petroleum Exporting Countries fell to a six-month low in November, but a jump in U.S. output will make it more difficult to drain global stocks by the end of 2018, the group said in its monthly report on Wednesday.
OPEC and other major producers agreed last month to extend a deal to cut supplies through to the end of 2018 in the hope of bringing stocks in the Organization for Economic Cooperation and Development, or OECD, in line with their five-year average.
Growing production in countries that didn't partake in the deal, however, makes it more difficult for that effort to succeed. The International Energy Agency on Thursday revised non-OPEC supply growth in 2018 up 200,000 barrels a day to 1.6 million barrels.
"A fearsome resurgence in non-OPEC supply next year may cause an OPEC-led drive to eliminate the global oil oversupply to falter," said Stephen Brennock at brokerage PVM. "OPEC supply restrictions are at risk of being overshadowed by U.S. producers which will strike back with a vengeance in 2018."
Gasoline futures rose 0.05% to $1.6715 a gallon. Diesel futures rose 0.77 cent, or 0.4%, to $1.9176 a gallon.
Alison Sider contributed to this article
Write to Sarah McFarlane at firstname.lastname@example.org
(END) Dow Jones Newswires
December 15, 2017 11:49 ET (16:49 GMT)