As Brits across the UK sip their tea and nosh on their crumpets during a winter freeze they certainly will scream “criminy” when they receive a higher than normal heating bill at months’ end due to Britain’s biggest pipeline from its North Sea oil and gas fields being shut for several weeks catapulting international crude prices to their highest levels since mid-2015. The Forties pipeline carries around 450,000 barrels per day and is the largest component of the Brent-Forties-Oseberg-Ekofisk-Troll (BFOE) complex of crudes that are the basis for the Brent futures contract. Brent futures have jumped to a premium of more than $7 per barrel over WTI from under $5 at the start of last week.
As of 12:45 pm EST however, markets have receded from their morning exuberance and are all trading lower on the day. Brent is down $1.18 at $63.51, WTI is down $0.84 at $57.15, HO is down $0.0156 at $1.9350, and RBOB is down $0.0182 at $1.7084. If Brent is to settle under yesterday’s low of $62.99, a key reversal will be in play. Which should see the price of Brent retreat back to the near-term double-bottom support level of $61.10.
In the meantime, let us all enjoy some bangers and mash to warm the body and wait for tonight’s APIs and tomorrow’s DOEs for a more clearer picture on supply and demand in our region of the world. Below is a Reuters Poll showing estimates for U.S. crude oil inventories:
Crude -3.8 million
Distillate +0.9 million
Gasoline +2.5 million