Brent crude prices got a major boost this week after the operator of the largest oil pipeline network in the North Sea announced it would shut it down for three weeks after the discovery of a hairline fracture.
Ineos, an independent oil and gas producer that acquired the infrastructure from BP earlier this year for $250 million, said on Thursday that the crack was “stabilized” and it was now considering ways to repair it.
The Forties network transports more than 400,000 bpd from oilfields in the North Sea to the Scottish coast, supplying 40 percent of UK’s oil. As a result of the shutdown, 85 platforms had to stop producing and Brent briefly jumped above $65 a barrel.
For WTI this is good news as the more the discount at which it trades to the international benchmark widens, the more attractive U.S. crude becomes, especially for Asian customers, which are key buyers and always on the lookout for bargains. According to analysts, we’re likely to see a spike in Asia-bound U.S. crude oil exports while the Forties remains shut.
On the other hand, the U.S. benchmark was buoyed on Wednesday, after the EIA reported the fourth consecutive weekly crude oil inventory draw, and the spread with Brent has narrowed to about $6 a barrel. Still, the discount is substantial enough to keep demand for U.S. crude growing.
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