Brent crude at 27-mth high near $98 on disruption concerns
Brent crude prices stayed near USD 98 on Wednesday, the highest level since October 2008, as production shutdowns in Norway and Alaska raised expectations of an accelerated tightening of supplies in Atlantic basin, Middle East and Asia-Pacific oil markets.
January 12, 2011 / 12:48 IST
Brent crude prices stayed near USD 98 on Wednesday, the highest level since October 2008, as production shutdowns in Norway and Alaska raised expectations of an accelerated tightening of supplies in Atlantic basin, Middle East and Asia-Pacific oil markets.
A gas leak forced Norway's oil and gas producer Statoil to shut its Snorre and Vigdis fields, which jointly produce about 157,000 barrels per day (bpd). The company did not give an outlook for when they would resume output, adding to supply concerns as Europe's winter depletes stockpiles. Trans Alaska Pipeline operator Alyeska late on Tuesday received government permission to restart the duct for "interim operations" to prevent crude from freezing after a leak shut it down on Saturday, a company spokeswoman said, adding flows would resume through the night though she gave no estimate of volumes.The pipeline normally transports about 12% of US crude output. An outage lasting more than a week may force refiners in the US west coast to look for alternatives in Russia and the Middle East, traders and analysts said."With the strong demand growth from Asia, disruptions have become a concern again," said Tony Nunan, a risk manager with Tokyo-based Mitsubishi Corp. "People are looking at a higher baseline of inventories in a more dangerous geopolitical environment.""The cold weather is also making the market more sensitive. Brent is a waterborne crude and will be affected more by any disruption. It represents the swing crude going to Asia," which may be pulled over to the US west coast, Nunan said.Brent crude for February rose 2 cents to USD 97.63 a barrel at 0515 GMT after touching USD 97.82 on Tuesday, the highest price in 27 months.US crude rose 6 cents to USD 91.17, having traded more than USD 7 below Brent on Tuesday, the widest spread since February 2009, because of landlocked high inventories at the Cushing, Oklahoma delivery point. Support also came from forecasts for higher heating demand this week as the US Northeast, the world's biggest heating oil market, prepared for another snowstorm.US crude oil stockpiles managed a 57,000-barrel gain last week, according to data from industry group the American Petroleum Institute released late on Tuesday, in the face of expectations crude stocks had fallen. Gasoline stocks rose by 7 million barrels and distillate stocks added 1.6 million barrels, the API report showed.The US government's Energy Information Administration will release its own data on inventories on Wednesday at 10:30 am EST (1530 GMT).Ahead of the API data, an expanded Reuters survey of analysts on Tuesday forecast US crude oil inventories probably fell 1.1 million barrels last week. Distillate stocks, which include heating oil and diesel, were seen up 1 million barrels, while gasoline stocks were expected to have gained 1.8 million barrels, the survey showed.US retail gasoline demand was little changed last week from the previous period but fell compared to year-ago levels, a MasterCard report said. In other markets, the euro rose against the dollar on Wednesday, along with Asian stocks, but caution towards the currency is likely to set in ahead of key bond sales by highly indebted eurozone members Portugal and Spain. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
