Oil prices hovered below a 2 1/2 -year high Tuesday, with Brent underpinned by the continuing pipeline outage in the North Sea.
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U.S. crude futures rose 22 cents, or 0.38%, to $58.69 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 16 cents, or 0.25%, to $65.41 a barrel on ICE Futures Europe.
Investors and traders were monitoring the outage of the Forties Pipeline System in the North Sea where a hairline crack stopped the flow of 450,000 barrels a day of crude earlier this month.
Pipeline operator Ineos said Sunday it continued to make good progress toward its restart, which is anticipated early in the New Year. A small number of customers are now sending volumes through the pipeline at low rates, Ineos said in a statement.
The pipeline outage curtailed North Sea production this month and sent prices higher. But restart plans haven't sent prices spiraling, which analysts said is a bullish signal.
"Upward momentum has been revived by the ability of the Brent trade to strengthen in the face of this week's expected restart of the Forties pipeline system," Jim Ritterbusch, president of Ritterbusch & Associates, said in a client note.
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Oil prices are set to end the year near their highest level since July 2015, boosted by supply disruptions, along with efforts by the Organization of the Petroleum Exporting Countries and other major producers including Russia to curb production. Strong growth in U.S. shale output is helping limit gains, however.
"All eyes are on shale production for the first half of 2018 and that will drive OPEC's decisions for the rest of the year," said Richard Fullarton, founder of London-based hedge fund Matilda Capital Management Ltd.
OPEC agreed in November to extend production cuts throughout 2018 as it targets reducing global stocks to their five-year average. But meanwhile U.S. oil production hit a record high of 9.789 million barrels a day in the week ended Dec. 15, according to data published by the Energy Information Administration.
Prices also got a boost Tuesday from cold weather that boosted demand for heating oil.
"It's freezing cold in the northeast and diesel is leading the way," said Andy Lipow, president of Lipow Oil Associates in Houston.
Gasoline futures fell 1.03 cent, or 0.58%, to $1.7520 a gallon. Diesel futures rose 1.75 cents, or 0.89% to $1.9869 a gallon.
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(END) Dow Jones Newswires
December 26, 2017 10:41 ET (15:41 GMT)