What's Moving the Oil Markets?

•ICE Brent is now trading in backwardation along the whole curve. The main reason for the shift in the Brent spreads was the shutdown of BP's CATS pipeline in the North Sea, which could lead to production shut-ins, brokers said. The BP-operated subsea pipeline takes wet gas from North Sea fields, many of which feed the benchmark 600,000 b/d Forties crude blend. Without the ability to offload gas to the CATS pipeline, some fields might be forced to shut in production, affecting the quality of Forties.

•The latest IEA report showed that tightness in the global oil market could ease in 2008 as new supply capacity and refining upgrades come on stream, more than keeping pace with continued strong demand. "Overall, both in terms of spare upstream capacity and refinery flexibility, 2008 looks at this stage to be slightly more comfortable than 2006 and 2007," the IEA said.

Updated: July 13, 2007