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UPDATE 2-Oil rises to near 1-month high on tightening of supplies

Published 05/04/2017, 03:16 pm
Updated 05/04/2017, 03:20 pm
© Reuters.  UPDATE 2-Oil rises to near 1-month high on tightening of supplies
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* Unplanned North Sea production outage lifts prices

* Shipping data shows fall in tanker supplies as OPEC cuts

* But U.S. market remains bloated on production gain

* U.S. EIA fuel inventory data due out later on Wednesday (Adds comment, North Sea outage detail, updates prices)

By Henning Gloystein

SINGAPORE, April 5 (Reuters) - Oil climbed to a near one-month high on Wednesday on signs of a gradual tightening in global oil inventories and on concerns about a supply outage at a field in the United Kingdom's North Sea that feeds into an international benchmark price.

Prices for Brent crude futures LCOc1 , the international benchmark for oil, were at $54.46 per barrel at 0457 GMT, up 29 cents, or 0.5 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were up 33 cents, or 0.6 percent, at $51.35 a barrel.

Both benchmarks on Wednesday hit their highest levels since March 8.

"The immediate reason for the move was an unplanned production outage in the North Sea," said Sukrit Vijayakar, director of energy consultancy Trifecta, referring to an unplanned production outage at the Buzzard oil field in the North Sea. produces about 180,000 barrels per day. It is the largest contributor to the Forties crude stream that is a key component of the physical Brent oil price that the Brent futures contract settles against.

Traders also said that prices gained amid slowly tightening market conditions, with the Organization of the Petroleum Exporting Countries (OPEC) leading an effort to cut output.

With most of OPEC's crude exported on tankers, tracking ship movements can be a good gauge of market conditions.

Shipped oil supplies have fallen by as much as 17 percent this year, according to oil analysis firm Vortexa.

"We have seen a significant reduction in global oil supply since January, with oil on water going from 978 million barrels on Jan. 1 to 812 million barrels on April 3," said Vortexa chief executive Fabio Kuhn.

"These changes are a signal that the rebalancing is happening faster than many in the market believe."

Trading data in Thomson Reuters Eikon shows that OPEC shipments to the rest of the world fell to 813.7 million barrels by the end of March from 796.6 million barrels in January.

But the tighter markets will only gradually lead to a reduction in bloated inventories as production especially the United States is rising.

U.S. crude stocks fell by 1.8 million barrels last week to 533.7 million, still near an all-time record, the American Petroleum Institute reported late on Tuesday. U.S. Energy Information Administration will issue its inventory figures later on Wednesday.

At the heart of the bloated U.S. market is rising production.

The U.S. rig count rose for an 11th straight week last week to 662, making the first quarter of 2017 the strongest quarter for rig additions since mid-2011, according to energy services firm Baker Hughes. RIG/U

Following a slump in 2015 and 2016, U.S. oil production C-OUT-T-EIA has risen 8.5 percent since mid-2016 to 9.15 million bpd, the same level output stood at in 2014, when the market downturn began.

"Price upside will... be capped by the recovering U.S. shale sector," BMI Research said.

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