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Oil tops $65, first time since 2015, on UK pipeline outage
Oil also gained support from expectations the latest reports on US inventories will show a further tightening of supplies.
LONDON: Oil rose above $65 a barrel for the first time since mid-2015 on Tuesday as an unplanned shutdown of the UK`s biggest North Sea oil pipeline supported a market already tightened by OPEC-led production cuts.
The Forties oil pipeline helps set global oil prices. It was scheduled to pump 406,000 barrels per day (bpd) in December, but was shut down on Monday after cracks were found in what traders believe is the first unplanned outage for some years.
Brent crude, the global benchmark, was up by 90 cents at $65.59 at 0915 GMT, after breaking above $65 for the first time since June 2015 and trading as high as $65.70. U.S. crude rose 49 cents to $58.48.
"Such a reaction indicates that supply disruptions can no longer be ignored in tight markets," said Hussein Sayed, analyst at FXTM.
The Forties pipeline is important for the global oil market because the crude it carries normally sets the price of dated Brent, a benchmark used to price physical crude around the world and which underpins Brent futures.
Analysts said the outage was likely to cause significant delays in the loading of Forties crude cargoes.
"The complex is receiving support from the physical side and what is expected to be a multi-week outage," JBC Energy said. "We would expect a large deferrals list for the Forties loading programme to spill over into January."
Oil also gained support from expectations the latest reports on U.S. inventories will show a further tightening of supplies.
U.S. crude stocks are expected to fall by 3.8 million barrels, a fourth straight week of decline, according to analysts polled ahead of reports from industry group American Petroleum Institute and the government`s Energy Information Administration.
The API is scheduled to release its data for last week at 2130 GMT on Tuesday, with the EIA following on Wednesday.
Oil supply cuts led by the Organization of the Petroleum Exporting Countries this year have helped to whittle away an excess of inventories which built up following a global supply glut which began to emerge in late 2014.
But U.S. crude has lagged the rally in Brent in part because of rising U.S. oil production.
As a result, Brent has jumped to a premium to U.S. crude of more than $7, the highest in more than two years.