Oil prices have increased by more than 1% following a production outage in the North Sea and supply cut expectations from the Organisation of the Petroleum Exporting Countries (OPEC).
Brent crude oil futures, the international benchmark for crude prices, rose 89 cents, or 1.5%, to reach $61.10 a barrel, while US West Texas Intermediate (WTI) crude futures climbed 80 cents, or 1.6%, to $52.36, Reuters has reported.
Following the discovery of pipe corrosion, Canadian oil and gas company Nexen closed the Buzzard oilfield, which is said to be the largest contributor to the Forties crude stream.
According to trade sources, three cargoes scheduled to load next month had been cancelled due to the shutdown.
In a separate development, Total’s Elgin-Franklin fields in the UK North Sea have also been temporarily closed due to maintenance work.
Speaking about the Buzzards field shutdown, Trifecta director Sukrit Vijayakar said: “The shutdown is reducing supply of a North Sea crude that helps set global prices.”
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The recovery in crude prices is however not enough to recover the losses witnessed since early October, as the 30% decrease in prices is steeper than the slump experienced during 2014-2015.
Prices have also been supported by the expectation that OPEC will make a decision at its meeting in Vienna next month to impose supply cuts to counter emerging oversupply in the market.
Another major event set to impact prices is the meeting of G20 leaders in Argentina this weekend.
The meeting is likely to feature the ongoing trade war between Washington and Beijing, as well as oil policy.
Although most analysts foresee output reduction from the OPEC meeting, market sentiment continues to be negative.