Oil prices climb by more than 1% after failure in the North Sea and expected reductions in OPEC

SINGAPORE (Reuters) – Oil prices rose more than 1 percent Wednesday on the eve of an OPEC meeting next week during which the producers' club is expected to decide a form of supply reduction to counter the emerging glut.

The closure of Britain's largest North Sea oilfield for repair work also supported prices, traders said.

The futures price of WTI (West Texas Intermediate) CLc1 US crude futures was $ 52.24 per barrel at 0607 GMT, up 68 cents, or 1.3% since the last settlement.

Brent International LCOc1 crude futures rose 78 cents, or 1.3%, to $ 60.99 per barrel.

The Buzzard oil field, which pumps approximately 150,000 barrels per day (b / d), was closed temporarily after the discovery of pipeline corrosion. As a result, commercial sources indicated that three cargoes to be loaded in December had been canceled.

"The closure … reduces the supply of oil from the North Sea that helps set world prices," said Sukrit Vijayakar, director of the Trifecta Energy Council, referring to the role played by Buzzards in the settlement of the Brent futures contract.

Despite Wednesday's rise, oil prices have again lost about 30% of their value since early October, penalized by an emerging supply surplus and the widespread weakness of the financial markets.

The drop in crude oil prices since October is comparable to that of 2008 and more pronounced than in 2014/2015.

(GRAPHIC: Brent crude oil prices plummet from 2008, 2014/2015 and 2018 in percentage – tmsnrt.rs/2RiWkJ1)

The Organization of the Petroleum Exporting Countries (OPEC) will meet on December 6 at its headquarters in Vienna, Austria, to discuss production policy.

The OPEC meeting will follow a meeting in Argentina this weekend of the Group of 20 (G20) countries, which bring together the world's largest economies, during which the Sino-US trade dispute and oil policy should be discussed.

While most analysts expect a reduction in supply from the OPEC meeting, the climate on the oil markets remains negative.

"Option traders remain focused on downside risks following a 30% drop in WTI," said Erik Norland, Senior Economist at the CME Group Commodity Exchange, citing the higher number of traders placing positions likely to generate a new fall crude price than those who are betting on a rising market.

The portfolio managers reduced their combined net long-term gross futures positions by 607 million barrels in the last eight weeks, the largest reduction since at least 2013, when the current data series was launched.

The slowdown in global trade due to the Sino-US trade dispute, growing indebtedness and the strong dollar exerting pressure on emerging markets is a source of concern for global markets.

The World Trade Organization (WTO) said in its latest outlook, released Tuesday, that "trade growth is expected to slow further in the fourth quarter of 2018", with growth likely lower since October 2016.

(GRAPH: World Trade Organization (WTO) Outlook – tmsnrt.rs/2RlhEOc)