Oil jumped higher on Friday, December 15, buoyed by the Forties pipeline outage in the North Sea, ongoing OPEC-led production cuts and a decline in global stocks, although rising U.S. output kept a lid on markets.
U.S. West Texas Intermediate (WTI) crude futures were at $57.37 a barrel at 1137 GMT, up 33 cents, or 0.58 percent, from their last settlement.
Brent crude futures, the international benchmark for oil prices, were at $63.44 a barrel, up 13 cents, or 0.20 percent, from their previous close.
The ongoing outage of the Forties pipeline, which carries North Sea oil to Britain, was the main price driver, traders said.
While the pipeline outage physically mostly affects the North Sea region, it is of global relevance as the crude it supplies is part of the deliveries that underpin the Brent price benchmark.
“If the duration of the outage is for several weeks it should put upward pressure on the Brent price,” Jefferies said in a note.
Beyond the North Sea supply disruption, traders and analysts said markets were generally supported by efforts led by the Organization of the Petroleum Exporting Countries and Russia to withhold production to prop up prices.
Analysts from Barclays said they believed product inventory levels in industrialized nations were 2 percent below the 5-year average at the start of December compared with 10 percent above the 5-year average at the start of the year, with the drawdown driven by a combination of outages and strong demand growth.
Goldman Sachs said that market conditions allowed the major oil companies, which it referred as Big Oil, to enter “a positive earnings-revision cycle” and that “this should allow Big Oil to re-employ capital at double-digit returns”.
The U.S. bank said the improved market conditions were a result of a higher Brent crude oil price outlook of an expected annual average of $62, $60, and $55 per barrel for 2018, 2019 and 2020 respectively.
The companies usually associated with Big Oil are BP, Royal Dutch Shell, ExxonMobil, Chevron and Total.
Rising U.S. supply, driven largely by shale drilling, will likely move oil markets into a supply surplus in the first half of 2018, the International Energy Agency (IEA) said on Thursday, Reuters reports.