Oil prices retreated on Wednesday from 2015 highs hit on Tuesday despite a supply disruption in Libya as production resumed on the Forties pipeline system in the North Sea on which cracks were discovered on December 11. The Forties pipeline is responsible for about 450,000 barrels per day which will be fully restored early in 2018. Approximately 90,000 barrels per day of production was halted in Libya on Tuesday after an explosion on a pipeline feed the Es Sider port.
In response to these events, U.S. WTI was down to $59.69 per barrel as of 3 p.m. HK/SIN on Wednesday, a 0.47 percent decrease. Brent crude futures were down to $66.66 per barrel, a 0.54 percent slide. Oil prices have tightened significantly in recent weeks after OPEC confirmed to continuing its production cuts through the end of 2018. Data from the U.S. Energy Information Administration (EIA) shows that oil markets were in a slight deficit in 2017 after recovering from a difficult oversupply problem in 2015. Further data will be released by the EIA tomorrow.
Saudi Arabia is specifically motivated to keep oil prices high as it prepares for the privatization and IPO of Saudi Aramco, the country’s state-owned oil company, which is expected in late 2018. Analysts, however, question whether 2018 will see oil prices tightening further, or whether they’ll remain in the current range due to increased U.S. drilling.
Currencies linked to commodity prices headed higher on Tuesday’s price rally, with the Canadian dollar trading at $1.2675 after hitting a high of $1.2678, a level not seen since early December. The dollar eased slightly against its major partners in thin year-end trading.