Oil falls as UK pipeline moves closer to restart

FE Team | Published: December 21, 2017 21:09:01

A gas station attendant pumps fuel into a customer's car at a gas station in Shanghai, China. — Reuters

LONDON. Dec 21 (Reuters): Oil prices fell on Thursday after the operator of Britain's Forties pipeline in the North Sea said it was expected to restart in early January after repairs over Christmas.
Forties is the largest of the five North Sea crudes that underpin Brent, a benchmark for oil trading in Europe, the Middle East, Africa and Asia.
Oil prices have risen since the pipeline was shut on Dec 11. But Brent oil prices LCOc1 fell after the announcement to trade 23 cents down at $64.33 per barrel at 0933 GMT.
US West Texas Intermediate (WTI) crude futures CLc1 were at $58.02 a barrel, down 7 cents from their last settlement.
"Initially a small number of customers will send oil and gas through the pipeline at low rates as part of a coordinated plan that allows Ineos to carefully control the flow into the system," operator Ineos said in a statement.
"Based on current estimates the company expects to bring the pipeline progressively back to normal rates early in the new year," it said.
The system, which carries around 450,000 barrels per day of crude to Britain, along with a third of the UK's total offshore natural gas output, was closed after a routine inspection revealed a crack in an onshore section.
Ineos on Dec 13 was forced to declare force majeure on deliveries of Forties crude oil, natural gas and condensate, suspending its contractual obligations to customers due to circumstances beyond its control.
The privately owned chemicals company based in Switzerland bought the pipeline system from BP in late October.
Oil prices were also supported by falling crude inventories in the United States but capped by output that is fast approaching 10 million barrels per day, a level only surpassed by Saudi Arabia and Russia.
Both crudes gained around 1 per cent during their previous sessions, lifted by official data showing a 6.5 million-barrel fall in US crude inventories C-STK-T-EIA in the week to Dec 15 to 436 million barrels, the lowest level since October, 2015.