Brent Crude Falls to 2013 Low as Pipeline Flow Resumes

Brent crude declined to its lowest level this year, erasing this week’s advance, as flows increased through a North Sea pipeline after a five-day halt.

Brent futures dropped as much as 1.8 percent to the lowest since Dec. 26. The Brent Pipeline System in the North Sea is “approaching” its targeted flow rate of 80,000 barrels a day, an official for Abu Dhabi National Energy Co., or Taqa, said by phone today. The system had an unplanned halt on March 2. West Texas Intermediate crude was little changed, paring losses after the U.S. added more jobs than forecast last month.

“Supply normalization” is undermining the premium for Brent, said Miswin Mahesh, an analyst at Barclays Plc in London. “Steady supplies from key fields are also expected to lend support” to North Sea output next month, he said.

Brent for April settlement decreased as much as $2.01 a barrel to $109.14 on the London-based ICE Futures Europe exchange. It traded for $109.95 at 1:47 p.m. local time, and is down 0.4 percent this week. The volume of all futures traded was more than three times the 100-day average. The European benchmark grade was at a premium of $18.66 to WTI futures.

WTI for April delivery was 27 cents down at $91.29 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.13 to $91.56 yesterday, the biggest gain since Feb. 11 and the highest close since Feb. 28. Futures are up 0.9 percent this week, the first weekly advance in three.

Pipeline Restart

Taqa said yesterday it had started restoring the flow “of an estimated 80,000 barrels a day of crude” to the North Sea Brent pipeline, which accounts for about 10 percent of U.K. oil production. The company can’t yet say when the targeted flow-rate will be reached. Brent is one of four North Sea grades that make up the Dated Brent pricing benchmark.

Payrolls increased more than forecast in February and the jobless rate unexpectedly fell to a five-year low of 7.7 percent, a sign U.S. employers were undaunted by the budget impasse in Washington.

“There was an immediately positive reaction from the market in response to exceptional payrolls numbers,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “We shall have to wait and see what happens next, but there’s no doubt this is a macro-driven session.”

Employment rose 236,000 last month after a revised 119,000 gain in January that was smaller than first estimated, Labor Department figures showed today in Washington. The median forecast of 90 economists surveyed by Bloomberg projected an advance of 165,000. The jobless rate dropped from 7.9 percent.

Iran Minister

Oil prices are “at a reasonable level and will stay at this level” in the first half of the year, Iranian Oil Minister Rostam Qasemi said today in Tehran, according to the official Islamic Republic News Agency.

Indian refiners including Mangalore Refinery & Petrochemicals Ltd. may be forced to halt purchases of Iranian crude as local insurers refuse to cover the risks for any refinery using that oil, a company executive said.

“There’s a problem with getting insurance for refineries processing Iranian oil,” Mangalore Refinery Managing Director P.P. Upadhya said by phone today from his office in the southern city of Mangalore. “If there’s no clarity very soon, we all have to stop buying from Iran or risk operating the refineries without insurance.”

Seventeen of 37 analysts and traders, or 46 percent, forecast WTI will decrease through March 15, according to a Bloomberg survey. Thirteen respondents, or 35 percent, predicted a gain. Seven said there would be little change. Last week, 57 percent of analysts projected a decrease.

“The fundamental situation in the oil market is well-supplied,” said Gerrit Zambo, an oil trader at Bayerische Landesbank in Munich. “A correction could come at any time.”