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Brent oil hits two-year high after North Sea pipeline is closed for repairs
The Forties Pipeline, which carries 40 per cent of North Sea oil and gas, will be shut for two weeks after a tiny crack was discovered during a routine inspection
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Global benchmark Brent crude jumped above $65(£48.70) a barrel for the first time in two and a half years after one of the most important oil pipelines in the world was shut.
Futures rose 0.8 per cent in London, on course for their highest close since 10 June, 2015, after advancing 2 per cent Monday. It will take about two weeks to repair the North Sea Forties Pipeline System after a small hairline crack was discovered during a routine inspection, according to operator Ineos.
In the US, crude stockpiles are forecast to drop a fourth week, a Bloomberg survey showed before government data Wednesday.
A strategy to exit the deal can be drafted in June if the market is no longer oversupplied by then, according to United Arab Emirates Energy Minister Suhail Al Mazrouei.
“If the market has some visibility on how long it’s going to take to repair the pipeline, that removes some of the uncertainty and reduces the risk premium,” said Ric Spooner, a Sydney-based analyst at CMC Markets. “The relatively high global inventories will possibly cap any rally we have from here.”
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Brent for February settlement was at $65.20 a barrel on the London-based ICE Futures Europe exchange, up 51 cents, at 10:40am Hong Kong time. Prices rose $1.29, or 2 per cent, to $64.69 on Monday. The global benchmark traded at a premium of $6.89 to February West Texas Intermediate.
WTI for January delivery gained 30 cents to $58.29 a barrel on the New York Mercantile Exchange after advancing 1.1 per cent on Monday. Total volume traded was about 20 per cent below the 100-day average.
The supplies that flow through the Forties Pipeline System are the single largest constituent part of so-called Dated Brent crude that helps to settle more than half the world’s physical oil prices. The shutdown forced Apache Corporation to suspend operations at its nearby Forties field.
Bloomberg
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