Brent Oil Price Rise to 2-Year High Above $65

Brent oil price rose more than $65 a barrel, which is their highest since mid-2015. Though oil is moving northwards and is a second yearly gain as the Organization of Petroleum Exporting Countries (OPEC) and its allies including Russia extend supply cuts through to the end of 2018. This is considered as a strategy to exit the deal, can be drafted in June if the global market is no longer oversupplied by then, as per the United Arab Emirates Energy Minister Suhail Al Mazrouei.

Drop in US crude Stockpiles and impact on Brent Oil Price

There is an expectation of drop in the U.S. crude stockpiles by 2.89 million barrels last week, as per the survey by Bloomberg before an Energy Information Administration report Wednesday, which is contributing surge in oil price.

This will be drop a fourth week in the U.S. crude stockpiles. US crude oil futures has also rise and the jump in Brent prices has widened its premium to WTI prices to as much as over $7 a barrel, which is the highest premium since May 2015 and up from around $5 last week. This make US oil exports more attractive.

Shutdown of a North Sea pipeline

Brent crude jumped above $65 a barrel, after the shutdown of a North Sea pipeline, that blocked the significant supply from an already tightening market. Britain’s Forties pipeline was shut due to cracks as a cold snap affected the country.

The supplies that flow through the Forties Pipeline System are the single largest constituent part of Dated Brent crude, which settles more than half the world’s physical oil prices. As a result, the shutdown forced Apache Corp. to suspend operations at its nearby Forties field. It will take about two weeks to repair the small hairline crack.

Effect on Currencies

The surge in oil price led to rise in the commodity-linked currencies. The Australian dollar and the New Zealand dollar both rose half a per cent, while the Norwegian crown was up 0.7 per cent.

However, the investors are looking on the policy as the Federal Reserve will end its two-day meeting on Wednesday, while the European Central Bank is meeting on Thursday.