Crude reaches one-week high as shrinking stockpiles stoke bulls

By Jessica Summers on 12/21/2017

NEW YORK (Bloomberg) -- Crude revisited a one-week high as the lowest U.S. back-up supply in more than two years overshadowed the impending resumption of North Sea oil shipments.

Futures rose as much as 0.3% in New York. U.S. crude stockpiles last week plunged by the most since the height of North America’s summer driving season, the Energy Information Administration said on Wednesday. Meanwhile, Ineos Group’s Forties Pipeline System, which hauls oil from North Sea fields and helps set international crude and fuel prices, has been shut since Dec. 11 after a hairline crack was discovered. Repairs are underway.

Bullish sentiments linger among traders following the “bigger-than-expected inventory draw” in Wednesday’s government tally, said Rob Haworth, who helps oversee $150 billion at U.S. Bank Wealth Management in Seattle. “That’s still on the minds of market participants.”

Ineos said it’s making preparations to re-start the Forties network that snakes across the sea floor and delivers crude to the UK mainland. Normal operations probably will resume in early January, the company said.

“We’ve had a nice run up based on the combination of bullish forecasts, crude inventory declines and problems in the North Sea,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Mass., said by telephone. “More likely, we’ll see the pipeline coming back on, so people figure take your profits before year-end.”

West Texas Intermediate for  February delivery edged higher by 19 cents to $58.28/bbl at 11:28 a.m. on the New York Mercantile Exchange. Total volume traded was about 49% below the 100-day average.

Brent for February settlement added 16 cents to $64.72 on the London-based ICE Futures Europe exchange. The global benchmark traded at a premium of $6.44 to WTI.

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