Industry Trend Analysis - FPS Outage To Boost US Exports, Weaken OPEC Compliance - FEB 2018

BMI View: The outage of around 450,000b/d of supply from the North Sea will trigger greater exports from the US and weaker compliance from OPEC in December to cover the temporary outage .

The Forties Pipeline System (FPS), which carries around 450,000b/d of crude oil from the North Sea to Grangemouth, has been shut down due to a crack in the onshore section of the pipeline. This will force as many as 85 offshore assets to shut down production while repair work is undertaken, pulling some 40% of supply from the Brent benchmark, and adding around 450,000b/d to global unplanned outages. Expectations are that the pipeline crack will take a number of weeks to repair, meaning this shortage is expected to sustain for much of December.

The immediate impact has been a more that USD2.0/bbl or 3% rise in the price of North Sea crude, to above the USD65.0/bbl mark for the first time since mid-2015. This has also dragged up the WTI price to more than USD58.0/bbl, and opened the spread to more than USD7.0/bbl.

Spread Widening
Front Month Brent, WTI & Spread (USD/bbl)
Source: Bloomberg, BMI

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