Oil Prices Creep Higher
Futures Flat As FOMC Meeting Begins; Brent Jumps Over $65 For First Time Since 2015
E-mini futures are modestly in the green this morning, though net of fair value the S&P index is poised for another record high open as the FOMC begins its last meeting for 2017 in which it is expected to raise rates by 25bps. European stocks gain while Asian equities slide led by weakness in Chinese airplane stocks. Brent has jumped above $65 for the first time since 2015 as a result of a shutdown in the Forties North Sea pipeline, which carries 40% of UK North Sea oil & gas production while sterling declines amid the ongoing Brexit drama despite the highest UK inflation print since 2012.
The Forties pipeline is important for the global oil market because the crude it carries normally sets the price of dated Brent, a benchmark used to price physical crude around the world and which underpins Brent futures. The shutdown comes as oil supply cuts by OPEC have helped chip away an excess of inventories built up following a global supply glut which began to emerge in late 2014.
“Such a reaction (in prices) indicates that supply disruptions can no longer be ignored in tight markets,” said Hussein Sayed, analyst at FXTM. U.S. crude oil futures were last 0.5 percent higher at $58.30 a barrel.