Oil Prices Edge Higher as Refiners Tap U.S. Stockpiles

By Alison Sider Features Dow Jones Newswires

Oil prices edged higher Thursday as refiners processed more crude from storage in the U.S.

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U.S. crude prices approached the $60 a barrel milestone they briefly reached earlier this week, but stopped short, rising 20 cents, or 0.34%, to $59.84 a barrel on the New York Mercantile Exchange. Brent rose 28 cents, or 0.42% to $66.72 a barrel on ICE Futures Europe.

U.S. crude stockpiles fell for a sixth straight week as refiners continued to process ever increasing amounts of oil into fuel. Oil inventories dropped by 4.6 million barrels, compared with the 3.7 million decline that analysts surveyed by The Wall Street Journal had anticipated. Gasoline and diesel stocks increased, but altogether total stocks of crude and petroleum products fell by 8.8 million barrels.

"If you look at total crude and product stocks, it's another massive draw," said John Saucer, vice president of research and analysis at Mobius Risk Group.

Oil production in the U.S. also fell, sliding by 35,000 barrels a day from its highest level -- the first weekly drop since October.

Oil prices have hovered around their highest levels since 2015 this week amid holiday trading and on pipeline issues that have disrupted supplies around the world. U.S. crude futures broke above $60 a barrel this week for the first time since 2015. While they have retreated somewhat, some said prices could keep climbing.

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"Sometimes you hit a significant high and run away. We're not running away from this high," Mr. Saucer said.

Gains have been limited by the impending return of a major U.K. pipeline system, however.

Brent prices jumped earlier this month after the Forties Pipeline System had to be shut to fix a hairline fracture. Repairs on the pipeline, which carries nearly 450,000 barrels of oil a day in the North Sea, have been progressing more rapidly than expected.

Pipeline operator Ineos said Thursday that "restrictions on the flow of oil and gas from platforms feeding into he pipeline have been fully lifted" and said it expects the pipeline to return to full rates "around new year." Previously the company had said the pipeline would be back to normal early in 2018.

Crude futures were buoyed earlier in the week by an explosion on a pipeline that feeds Libya's largest oil port. The explosion was caused by sabotage but it is unclear who was behind it, according to two Libyan oil officials.

But the effect of the incident has been somewhat more muted than initially anticipated. Some 70,000 barrels of crude production a day is shut in, compared with early estimates that up to 100,000 barrels a day could be affected, and the pipeline is likely to be repaired within six days, the officials said. Until then, some loadings have continued, albeit at a slower rate.

Gasoline futures rose 0.15 cent, or 0.08%, to $1.7930 a gallon. Diesel futures rose 1.19 cents, or 0.58%, to $2.0521 a gallon.

--Benoit Faucon contributed to this article.

Write to Alison Sider at alison.sider@wsj.com

(END) Dow Jones Newswires

December 28, 2017 15:40 ET (20:40 GMT)