Oil prices edged lower on Monday, as growth in U.S. crude output cast a shadow over the market offset support from a North Sea pipeline outage and a workers’ strike in the Nigerian energy industry.
U.S. West Texas Intermediate (WTI) crude futures ended Monday’s session down 14 cents at $57.16 a barrel.
Brent crude futures, the international benchmark for oil prices, were at $63.15 a barrel, down 8 cents from their last close at 1:53 p.m. ET (1853 GMT).
The Brent benchmark had traded as high as $63.91 earlier in the day, but the contract pared gains after Ineos, the operator of the closed North Sea Forties pipeline, said crack in the line that shut it down had not spread.
“The Forties pipeline outage is continuing to be supportive of the market,” said John Kilduff, partner at Again Capital. “We’re just watching this as to see how the market reacts to not having these barrels available.”
The 450,000-barrels-per-day (bpd) link that provides some of the physical crude underpinning Brent has been shut since Dec. 11, forcing Ineos to declare force majeure on all oil and gas shipments from it last week.
“There is still no reliable information about how long the repair work will last and when the pipeline will go back into operation,” Commerzbank said in a note, adding “this should preclude any fall in the Brent price for the foreseeable future.”
A major Nigerian oil union said on Monday it would suspend a nationwide strike after securing worker demands through dispute resolution with the government and an oil firm. The strike by Nigerian oil workers had sparked concerns over exports from Africa’s largest crude producer.
The Petroleum and Natural Gas Senior Staff Association of Nigeria, whose members mainly work in the upstream oil industry, started industrial action on Monday after talks with government agencies ended in deadlock.
In the United States, energy companies cut rigs drilling for new production for the first time in six weeks, to 747, in the week ended Dec. 15, energy services firm Baker Hughes said on Friday.
Despite the dip in drilling, activity is still well above this time last year, when the rig count was below 500. Actual U.S. production has soared by 16 percent since mid-2016 to 9.8 million bpd.
U.S. output is fast approaching that of top producers Saudi Arabia and Russia, which are pumping 10 million bpd and 11 million bpd respectively.
This has undermined market-balancing efforts by the Organization of the Petroleum Exporting Countries and a group of non-OPEC producers including Russia to withhold production.
Largely because of rising U.S. shale output, the International Energy Agency said global oil markets would show a supply surplus of around 200,000 bpd in the first half of 2018.
The U.S. Energy Information Administration showed a similar surplus for that period and indicated a supply overhang of 167,000 bpd for all of 2018.