Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

U.S. crude tops two-year high as Keystone outage continues to hit supply

Published 11/24/2017, 10:18 AM
Updated 11/24/2017, 10:18 AM
© Reuters. A fuel dispenser is seen at a petrol station in Riyadh

© Reuters. A fuel dispenser is seen at a petrol station in Riyadh

By Polina Ivanova

LONDON (Reuters) - U.S. oil prices hit their highest levels in more than two years on Friday as the shutdown at North America's Keystone pipeline continued to cut deliveries to storage facilities.

U.S. light crude (CLc1) hit $58.92 a barrel, a more than two-year high, before easing to trade up 68 cents on the day at $58.70 by 1424 GMT.

Trading activity was expected to be low on Friday due to the U.S. Thanksgiving holiday.

Benchmark Brent crude (LCOc1) was trading flat at $63.55 a barrel.

The spill on Nov. 16 at the Keystone system linking Alberta's oil sands with U.S. refineries has reduced the usual 590,000 barrel-per-day flow to U.S. refineries, driving down inventories at the storage hub of Cushing, Oklahoma, traders said.

PVM Oil Associates strategist Tamas Varga said the spill was helping U.S. crude, flipping prices into backwardation, when front-month prices rise above those for future months, indicating an undersupplied market.

"January is now 4 cents more expensive than February, and I think we have not seen that for three years," he said.

Markets have also tightened globally due to output cuts since January by the Organization of the Petroleum Exporting Countries, Russia and several other producers.

OPEC meets on Nov. 30 and is expected to extend the pact to curb supplies beyond its expiry in March, although Russia has sent mixed signals about its support for an extension.

"With the majority of OPEC members endorsing an extension, Russian support is the key risk," Jon Rigby, head of oil research at UBS, wrote in a note.

President Vladimir Putin indicated in October that Russia backed extending the deal to the end of 2018, but comments by officials and in the Russian media have created uncertainty since then, he said.

J.P. Morgan said a decision on any extension could be delayed until next year if Brent stayed above $60.

However, rising U.S. oil production has curbed crude price gains, as it fills some of the gap left by OPEC and its allies. U.S. output has jumped by 15 percent since mid-2016 to a record 9.66 million bpd, thanks largely to shale drilling.

© Reuters. A fuel dispenser is seen at a petrol station in Riyadh

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.