Crude oil futures seesaw amid supply build; ICE Brent down to $60.10/b

Crude oil futures were mixed in morning trading in Europe amid a picture of ever healthier supply. At 1201 GMT, January ICE Brent crude futures were down 11 cents from Tuesday’s close at $60.10/b. The January NYMEX sweet light crude contract gained 8 cents to $51.64/b. There was bearish news from the US, with the American Petroleum Institute reporting a 3.45 million-barrel build in US crude stocks for the week ended November 23, market sources said.

Analysts surveyed by S&P Global Platts Monday had predicted a 430,000-barrel draw. The build points to an oversupplied market and highlights the need for supply to be reduced, analysts at Commerzbank said in a research note. There was some bullish sentiment from the North Sea but the market appears to have shaken this off. Production resumed Tuesday at the Elgin-Franklin oil and gas complex, which feeds Forties crude flows, after a technical issue was resolved, port operator Total said.

The shutdown at Elgin-Franklin earlier Tuesday had threatened to compound production problems with the Forties crude stream resulting from an ongoing maintenance shutdown at the Buzzard field. Buzzard remains closed while its operator, China-owned Nexen, deals with a corrosion issue, reducing UK oil output by around 130,000 b/d. Some market observers cited the temporary suspension of production as a price-supportive factor Tuesday. Forties oil is the largest contributing oil grade to the Brent basket.

However, the glitch affects just 150,000 b/d of production, Commerzbank analysts pointed out. “The oversupply looming on the global market next year is roughly ten times as high, which makes the production outage in the North Sea seem nothing more than a drop in the ocean,” they said.

Market observers expect representatives from some key oil-producing nations to discuss production at the G20 summit in Buenos Aires this week, ahead of an OPEC meeting in early December. Geopolitics present an unpredictable backdrop to the talks; “I think it is genuinely unclear at this stage which way it will go and what Saudi Arabia and Iran will say to one another and to Russia,” one analyst said.