Dec. 13 (UPI) -- Oil prices waded into positive territory early Wednesday on word that OPEC was producing less and a key North Sea pipeline network was staying closed for now.
Ineos, which operates the Forties pipeline system in the North Sea, said Wednesday it was reviewing a range of options to repair cracks in a system that carries about 40 percent of total regional production, or about 450,000 barrels per day. A hairline crack discovered last week has spread and it could be a matter of weeks before the system returns to normal.
With several fields in the North Sea closed down in response, Phil Flynn, a senior market analyst for the PRICE Futures Group in Chicago, said in a commentary emailed to UPI that the North Sea outage "is going to continue to support prices and the selloff after the spike was really profit taking."
Crude oil prices gained more than 2 percent Monday, but erased the gains in the Tuesday session. The price for Brent crude oil, the global benchmark for the price of oil and a component of the basket of oils carried by the Forties system, was up 0.28 percent as of 9:15 a.m. EST to $63.52 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.42 percent to $57.38 per barrel.
Traders are watching the spread, or difference, between Brent and WTI closely. The large premium for Brent made WTI competitive on the global market, but any additional narrowing as a result of the Forties closure could spoil the advantage.
An early morning rally Tuesday was spoiled, meanwhile, by an estimate from the U.S. Energy Information Administration that total U.S. oil production next year could set a record at 10 million barrels per day. EIA later today publishes weekly data on supply and demand, which could influence the price for crude oil in either direction. The Organization of Petroleum Exporting Countries is working to erase a surplus, though that effort has been undermined by gains in U.S. oil production.
A decline in U.S. gasoline, crude oil, or petroleum product inventories could be indicative of a tighter market and send the price of oil higher later in the trading day. In its latest monthly market report, OPEC said it produced about 32.45 million barrels per day, a decline of about 133,500 barrels per day from November and the lowest in six months.
Elsewhere, the U.S. Labor Department reported the prices paid by consumers in November rose 2.2 percent from last year. Gasoline and energy-related costs accelerated the most when compared with other items like food, which saw a 0.6 percent increase from last year. In a potential indication of future demand and discretionary spending for the holidays, consumer prices for all energy commodities are up 16.4 percent from last year.