Oil prices rose yesterday, reversing earlier declines, after a North Sea pipeline shut for repairs and investors focused on commodities following an explosion in New York.
Brent crude futures LCOc1, the international benchmark for oil prices, rose $1.01 to $64.41 a barrel.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $57.70 a barrel, 35 cents above their last settlement.
The difference between the two grades was the largest since late October, as Brent rallied after the shutdown of the pipeline that carries the largest grade of North Sea crude oil.
The 450,000 barrels per day (bpd) pipeline, which carries Forties crude from the North Sea to the Kinneil processing terminal in Scotland, has been operating at reduced capacity for about four days before the shutdown.
The market had expected the pipeline to return to service quickly and was surprised by the extended shutdown, said John Kilduff, partner at Again Capital LLC in New York.
?It?s a significant amount of crude oil in a market that has been the tightest for crude oil,? Kilduff said.
Earlier in the session, both benchmarks popped higher after an explosion yesterday rocked New York?s Port Authority Bus Terminal, one of the city?s busiest commuter hubs.
Investors tend to head for hard-asset commodity markets like gold and silver during high-risk events, and oil can also attract investment, Kilduff said.
Early in the session, prices faced downward pressure from rising U.S. drilling activity that pointed to a further increase in American production, countering OPEC-led output cuts.
Brent and WTI have gained well over a third from 2017 lows, drawing support from a cut in production by the Organization of the Petroleum Exporting Countries and a group of non-OPEC producers, including Russia, which has been in place since the start of the year.
During the weekend, Kuwait?s oil minister suggested that an exit from the supply-cut agreement would be studied before June. The United Arab Emirates? energy minister said yesterday that OPEC plans to announce in June an exit strategy from the cuts, though he added it did not mean the pact would end by then.
Gains from the cuts could also be undermined by rising output from the United States, which is not participating in the deal to withhold production.
The number of rigs drilling for new oil output in the United States rose by two in the week to Dec. 8, to 751, the highest since September, energy services company Baker Hughes said on Friday. RIG-OL-USA-BHI
?The largest concern for investors currently remains the rise in the U.S. rig count,? said Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers.