(Bloomberg) -- Crude edged up after an industry report was said to show U.S. crude stockpiles slid for a fourth week.
Futures rose from the settlement in New York after the American Petroleum Institute was said to have reported U.S. oil inventories dropped by 7.38 million barrels last week. That’s more than twice the 2.89-million decline predicted by a Bloomberg survey of analysts. If the Energy Information Administration confirms the industry group’s tally on Wednesday, it’d be the biggest withdrawal since August.
Declining inventories “should be supportive for oil,” Phil Flynn, senior market analyst at Price Futures Group Inc. in Chicago, said by telephone. “The data suggests that refiner demand for oil is very strong.”
Brent and West Texas Intermediate oil both declined on Tuesday as worries eased about the supply impact of a major pipeline outage in the North Sea. Prices had been trending higher on the strength of an agreement by the Organization of Petroleum Exporting Countries and allied producers such as Russia to extend supply cuts through all of next year. Still, the OPEC-led accord faces a threat from American shale drillers, whom government forecasters expect will boost output next year to more than 10 million barrels a day.
WTI for January delivery traded at $57.46 a barrel at 4:32 p.m. after ending the session at $57.14 on the New York Mercantile Exchange. Total volume traded was about 29 percent above the 100-day average.
Brent for February delivery dropped $1.35 to settle at $63.34 on the London-based ICE Futures Europe exchange. The benchmark traded at a premium of $6.18 to February WTI after widening to $7.35 earlier in the session.
The Forties Pipeline System that funnels North Sea oil to the U.K. mainland was shut on Monday after a crack was discovered, and repairs may take about two weeks. The International Energy Agency sought to calm jittery nerves, saying the oil market remains well supplied.
The supplies that flow through the Forties Pipeline System are the single largest constituent of so-called Dated Brent crude that is used to settle more than half of the world’s physical oil prices. The pipeline shutdown forced Apache Corp. to suspend operations at its nearby Forties field.
The Forties outage is “a measurable disruption that the market can apparently cope with,” Thomas Finlon, director of Energy Analytics Group LLC in Wellington, Florida, said by telephone. After the Brent-WTI spread widened to more than $7 a barrel, “the ability to cover shortfalls with U.S. crude is pretty easy.”
- Kuwait will start selling Super Light crude oil in April when production reaches 120,000 barrels a day, according to person with direct knowledge of the matter.
- ICE gasoil deliveries plunged to a nearly three-year low in December, according to ICE Futures Europe.
- Protesters in Nigeria’s southern Niger River delta stopped work at three oil wells operated by Eni SpA’s Nigerian unit, their representatives said.
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