Lingering North Sea problems, Nigerian strike boost oil prices

Dec. 18 (UPI) -- The lingering closure of a major North Sea crude oil pipeline network and a strike by Nigerian oil workers sent crude oil prices slightly higher Monday.

Pipeline operator Ineos maintains it could be about a month before a crack on the Forties pipeline system near Aberdeen is remedied. The fault crimped the flow of about 40 percent of the North Sea's oil production.

Elsewhere, workers belonging to the Petroleum and Natural Gas Senior Staff Association of Nigeria said Monday they'd wage a labor strike.

Combined, Phil Flynn, senior market analyst for the PRICE Futures Group in Chicago, said in a commentary emailed to UPI that those two events could put wind in the sales of a late-year rally.

"If the strike in Nigeria is a long one it could cause some big problems for Europe and could cause some shortages," he said.

Nigeria is one of Africa's leading contributors to production from the Organization of Petroleum Exporting Countries.

With trading light during the holiday season, the price for Brent crude oil was up 0.56 percent at 9:17 a.m. EST to $63.58 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.59 percent to $57.67 per barrel.

The spread, or difference, between Brent and WTI gives U.S. oil an edge in markets where it's compatible. The spread has narrowed, however, in response to the shutdown of the Forties system because Brent is one of the oils moving through that infrastructure.

Gains early Monday may be supported by a decline in North American exploration and production, reported last week as rig counts by drilling services company Baker Hughes. Acceleration in U.S. shale oil production may be leading to higher costs and slowing down a sector credited with spoiling an effort by OPEC to balance the market with coordinated production cuts.

Tamas Varga, an analyst with London oil broker PVM, said it's too early to read anything into what amounts to short-term problems in the North Sea. Nevertheless, the ball may still be in OPEC's court.

"The outlook for next year is neither bullish nor bearish -- it is uncertain," he said. "Apart from revisions in U.S. oil output, OPEC's own production level, or better say the adherence to the deal, will be the most important price driver in 2018."