WTI Rebounds From Six-Week Low Before ECB Rate DecisionGrant Smith
Brent crude advanced, extending its premium to West Texas Intermediate to the highest in more than a month after the Buzzard oil field in the North Sea was halted.
Brent gained as much as 1 percent in London, reaching a four-day high, after two people with knowledge of the outage said production at the 200,000 barrel-a-day field stopped yesterday. Oil also gained as the dollar weakened from a five-week high against the euro. In western Libya, the port of Zawiya will export crude next week from the Sharara field, which resumed operations on Jan. 4, a government official said.
“The Buzzard outage will be having an impact on Brent,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd., a consulting company in London.
Brent for February settlement increased as much as $1.01 to $108.16 a barrel on the London-based ICE Futures Europe exchange. It traded for $108.06 as of 12:56 p.m. local time, down 2.4 percent this year. The European benchmark crude was at a premium of as much as $15.29 to WTI, the most since Dec. 4.
WTI for February delivery climbed as much as 60 cents to $92.93 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.34 to $92.33 yesterday, the lowest close since Nov. 27. The volume of all futures traded was about 13 percent below the 100-day average. Prices have fallen 5.6 percent since the start of the year.
The euro climbed 0.2 percent to $1.3602 at 12:41 p.m. London time after dropping to $1.3554 yesterday, the weakest since Dec. 5 as the European Central Bank kept its benchmark interest rate unchanged at a record low a meeting today.
“There’s quite a good correlation between oil and the euro-dollar at the moment,” said Gerrit Zambo, an oil trader at Bayerische Landesbank in Munich. “The macro situation has a good chance of stabilizing here on a more healthy level, but that means underscoring stability, and not potential for big increases” in the oil price.
Crude from the Buzzard field feeds into the Forties blend, one of four grades that make up the Dated Brent benchmark used to price more than half of the world’s oil. Karen Fordyce, an Aberdeen, Scotland-based spokeswoman for field operator Nexen Inc., didn’t immediately respond to e-mail and voice mail seeking comment.
Brent also gained after gunmen blew up a pipeline connecting oil fields in the Kirkuk region of Iraq, holder of the world’s fifth-largest crude reserves, to refineries, state-run North Oil Co. said in an e-mailed statement. Exports to Turkey were unaffected by the overnight sabotage.
Libya, holder of Africa’s biggest oil reserves, produced more than 500,000 barrels a day on Jan. 6 as its Sharara field and deposits elsewhere resumed pumping, according to nation’s oil ministry. Sustained output at that level would mark the first increase in 10 months, data compiled by Bloomberg show.
Tanks at Libya’s western port must be filled before exports from Sharara can commence, Ibrahim Al Awami, head of oil ministry’s department of measurement and inspection, said by phone today from Tripoli.
WTI sank 1.4 percent yesterday as data from the Energy Information Administration showed U.S. gasoline and distillate stockpiles increased more than forecast.
Crude inventories shrank by 2.68 million barrels to 357.9 million in the week ended Jan. 3, according to data from the EIA. That’s the lowest level since September. Stockpiles have dropped in December in nine of the past 10 years as companies in Gulf Coast states delayed imports and cut year-end supplies to reduce local taxes.
Distillate stockpiles, including heating oil and diesel, rose by 5.83 million barrels last week while gasoline climbed 6.24 million, the EIA said.