Brent crude inched higher for a second successive session on Tuesday as investors digested BP’s announcement on Monday of delays to the start of production at its giant Thunder Horse field in the Gulf of Mexico due to technical problems.
“BP’s problems in the Gulf of Mexico are of far more significance for the US and global oil markets than the recent pipeline corrosion incident leading to lost production at Prudhoe Bay,” said Kevin Norrish at Barclays Capital.
ICE November Brent gained 18 cents at $64.23 a barrel. Nymex October West Texas Intermediate which expires at the close of trade on Wednesday fell 3 cents to $63.77 a barrel while the November contract lost 5 cents at $64.40.
Traders said the BP news appeared to have put a support floor under crude prices following the sharp falls in recent weeks.
Both the International Energy Agency and the Organisation of the Petroleum Exporting Countries previously forecast non-OPEC supply growth of 1.8m barrels a day next year but these estimates are likely to fall by around 300,000 barrels a day as a result of Thunder Horse.
One Opec official said: “This is amazing. Thunder Horse was absolutely key.”
Gold fell 1.4 per cent to $580.10 a troy ounce as investors waited for developments in the foreign exchange market ahead of the Federal Reserve’s latest decision on US interest rates on Wednesday.
Silver fell 1.8 per cent to $10.93 but technical analysts said the price chart was sending a “buy” signal after support at $10.40 held.
Platinum eased 0.5 per cent to $1,152 a troy ounce while palladium was unchanged at $307 a troy ounce.
Traders said trading volumes for base metals were weak ahead of the Fed.
Copper firmed 0.5 per cent to $7,490 a tonne supported by ongoing concerns about strike action causing supply disruptions.
Nickel rose 4.3 per cent to $27,750 a tonne ahead of the third Wednesday of the month which is the busiest day for LME trading. But one month after the LME was forced to introduce special measures to calm nickel trading, much of the strain appears to have dissipated from the market.
Inflows of all base metals to LME warehouses have slowed sharply in September which traders said would normally indicate that physical markets have become tighter as production rises after summer holidays. An alternative explanation suggested stockholders remain content to absorb increases in their inventories away from the market, reflected in the contango structure of some forward price curves.Zinc was 0.3 per cent weaker at $3,320 a tonne in spite of a fall of 1,200 tonnes in LME stocks.