Oil headed for the first weekly advance in a month as U.S. crude stockpiles fell to the lowest level in more than two years and the pace of production gains slowed.
Front-month futures slid 0.5 percent in New York, trimming the weekly gain to 1.4 percent. Crude supplies slid last week to 436.5 million, the lowest level since October 2015, according to U.S. government data Wednesday. Output expanded at the smallest rate since starting a nine-week gain in mid-October. The North Sea’s Forties Pipeline System is set to return to normal flows early next year, according to a statement from operator Ineos Group.
Oil is poised for a second yearly gain as the Organization of Petroleum Exporting Countries and its allies cut supply to trim a global glut. Worldwide inventories won’t fall enough to be near the level targeted by OPEC when the group meets in June, Saudi Arabia’s Energy Minister Khalid Al-Falih said this week, signaling the kingdom may keep production restrained to the end of the year.
“The latest run” in prices is “based on a cocktail of U.S. stock draws and outages in the North Sea,” said analysts led by Michael dei Michei at JBC Energy GmbH in Vienna.
West Texas Intermediate for February delivery was at $58.10 a barrel on the New York Mercantile Exchange, down 26 cents, at 9:39 a.m. in London. Total volume traded was about 47 percent below the 100-day average. Prices added 27 cents to $58.36 on Thursday, the highest close in almost three weeks.
Brent for February settlement lost 13 cents to $64.77 a barrel on the London-based ICE Futures Europe exchange after climbing 0.5 percent Thursday to the highest since June 2015. Prices are up 2.5 percent this week. The global benchmark traded at a premium of $6.63 to WTI.
Ineos expects to complete repairs to a hairline crack on the North Sea pipeline by “around Christmas,” the company said in a statement on its website. Forties crude is the largest component of the physical benchmark Dated Brent, which is used by producers and traders across the world to price their oil.
China is on the verge of opening a domestic market to trade oil futures contracts. The ramifications run deep as foreign investors are set to be allowed to trade — a first for China’s commodities markets.