Oil prices recovered on Tuesday with US crude reaching $60 a barrel, a high last seen two and a half years ago. So far for this year US crude has rallied 11 percent.
Explosion of Pipeline in Libya
Reports of an explosion by military and energy sources that armed assailants blew up a pipeline in Libya which has reduced output of between 70,000 to 100,000 barrels a day also contributed to the increase in oil prices.
A decrease in global oil inventories has also boosted oil prices as OPEC together with Russia and other non-member producers have been withholding output since the beginning of Jan. The agreement to extend cuts in oil output has been extended through the year 2018 to relieve the glut.
Offsetting the cuts by OPEC, is U.S. rising production with the rig count for the week of Dec 22 at 747 according to a report by Baker Hughes.
U.S. crude climbed 2.6 percent or $1.50 to $59.97 a barrel. In earlier trading it reached $60.01 a high last seen in June 2015.
Brent crude gained 2.71 percent or $1.77 settling at $67.02 a barrel. So far for the year it has risen 17 percent year to date.
For the sixth straight week U.S. crude oil inventories were down, gasoline stockpiles grew.
The Key North Sea Pipeline, Forties is set to restart gradually pumping and according to Ineos its operator the Kinneil processing plant has already partially restarted. A broker at ICAP in North Carolina, Scott Shelton said that the pipeline and field is old and might have issues and that is why the market most probably isn’t selling off on it.
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