Brent Plagued By Buzzard Threat
Brent crude oil traded at 109.60 on Wednesday. The commodity has held steadily below $110 this week as Hurricane Sandy threatened to interrupt the supply chain on the east coast of the United States. The storm, said to be the largest in US history, caused oil refineries to shut down and wait out the storm. Now, refineries are assessing damage and working to restore productivity.
While the initial onset of the storm caused prices to increase, many are expecting the aftermath to pull prices the opposite direction. Millions are still without power on Wednesday, and the storm took out transportation avenues like bridges, subways and ports in many major cities. Until the damage is repaired, the consumption in the U.S. will be reduced.
The reopening of Buzzard Oil Field also looms on the horizon, threatening to pressure Brent prices with an influx of supply. The 220,000 barrels per day oilfield has struggled to restart over the past few days after being closed for maintenance in October.
The oilfield produces Forties crude, traditionally the cheapest of the four crude oil streams that make up the Brent benchmark. Since Brent prices are set by the cheapest of its four streams, the reopening and thus influx of the cheapest stream could send prices on a nosedive. Financial Times reported that the oilfield has struggled to reopen several times in the past week because of a series of problems, keeping Brent prices afloat.
Now, the opening is predicted to be delayed until later in the week. Between this reopening and lower demand from the world's top consumers, many are expecting to see a sharp drop in Brent prices over the next month.
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