Crude oil prices settle back into negative territory as traders turn their focus toward operations in the North Sea. File photo by Brian Kersey/UPI | License Photo
Dec. 27 (UPI) -- Crude oil prices reversed course on Wednesday to turn negative on the prospects of more oil coming out of the North Sea.
The price of oil shot up more than 2 percent in late Tuesday trading on reports of an explosion on a pipeline in Libya. The National Oil Corp. said in an undated statement that its production could be out by as much as 100,000 barrels per day as a result of the incident on a pipeline feeding the nation's largest oil depot.
Libya was producing around 973,000 barrels per day as of November, though it's no stranger to outages. A member of the Organization of Petroleum Exporting Countries, it's exempt from the multilateral effort to eat into the surplus of oil on the market through production declines so it can use oil revenue to support national security efforts.
On Wednesday, new oil production was announced in the North Sea. Premiere Oil said its Catcher complex near Scotland will yield about 10,000 barrels per day initially, but that should top out at around 60,000 barrels per day during the early part of 2018.
The interim outage in Libya was factored in by Wednesday morning. The price of Brent crude oil was down 0.74 percent as of 9:20 a.m. EST to $65.97 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 0.57 percent to $59.63 per barrel.
New oil from the North Sea adds to the relief of market pressure from progress on the effort to fix the Forties pipeline system after a crack was discovered in mid-December near Aberdeen.
Pipeline company Ineos on Tuesday said repairs were "mechanically complete" and pressure testing was underway. After declaring force majeure earlier in the month, the company said some customers were already sending oil and gas back through the system at a reduced rate.
Force majeure is a contractual condition related to circumstances beyond the control of the parties involved.
The Forties pipeline system carries about 40 percent of North Sea production, including the blend of oils that make up the global benchmark, Brent. The closure of the system in mid-December triggered a spike in the price for Brent crude oil, a surge supported this week by the Libyan pipeline explosion.
The company said the pipeline will be running at normal rates by early January. Brent is about a half percent higher than when the Forties system shut down on Dec. 11.