Morning Market Overview

The market is lower this morning after Brent crude on the Intercontinental Exchange rallied overnight to a 2-1/2-year high due to an outage of a North Sea pipeline. The 450,000-bpd Forties crude pipeline that ships crude to Scotland was shut due to cracks as a cold snap sweeps the country, knocking out significant supply from a market that is already tightening.

Forties is one of the crude streams feeding Brent and the pipeline shutdown comes as oil production cuts by the Organization of the Petroleum Exporting Countries have helped reduce some of the excess global stocks. A DTN survey of analysts Tuesday morning shows the market expects crude oil inventories in the United States to have declined in the week-ended Dec. 8 while distillate fuel supply is estimated to have increased modestly and gasoline stockpiles are seen holding steady.

The market estimates an average crude oil stock draw of 4.0 million bbl nationwide for the week reviewed. Crude oil stocks at Cushing, Oklahoma, delivery hub for NYMEX West Texas Intermediate crude oil futures are estimated to have declined 1.0 million bbl during the week-ended Dec. 8. U.S. gasoline stocks are estimated to be unchanged while distillate inventories are seen to have increased by 250,000 bbl during the week under review.

The U.S. refinery run rate was estimated to have held steady at 93.8% of operable capacity.

The American Petroleum Institute will issue its oil report at 4:30 PM ET and the Energy Information Administration its weekly oil report at 10:30 AM ET Wednesday.