Market Analytics and Considerations
Key Notes
Before Tuesday’s relatively benign inflation statistics, which signaled smaller future U.S. rate increases, oil was already recovering from last week’s worst selloff in nine months.
As a result, U.K.-origin Brent oil and U.S. West Texas Intermediate, or WTI, petroleum rose by at least 3% for the second consecutive day. This allowed the two standards to recover approximately half of last week’s roughly 12% decline, resulting in them rising up around 6% on the week.
By 13:45 ET, Brent crude had risen $2.90, or 3.7%, to trade at $80.89. (18:45 GMT). Monday saw a 2.4% increase. Weeks ago, the price of the international crude benchmark dropped $9.47, or 11%, to a low of $75.14, the lowest level since December 23, 2021.
The price of WTI for January delivery increased $2.63 or 3.6% to $75.80. WTI increased by 3% on Monday. The U.S. crude standard saw its worst week since the week ending on March 25 as it finished the previous week down $9.28, or 11%. Last week’s session bottom for WTI was $70.11; this was the cheapest price since December 21, 2021.
Oil prices increased as the Keystone pipeline, which transports heavy Canadian petroleum to the Gulf Coast of the United States, remained closed.
A timetable for the repair and restarting of the pipeline where more than 14,000 barrels of oil escaped last week, creating the worst U.S. crude oil spill in almost a decade, was not available from Canada’s TC Energy (NYSE:TRP) Corp.
After the spill was found late last Wednesday in Kansas, TC Energy halted the pipeline. The 622,000 barrel each day Keystone line, a vital conduit transporting heavy Canadian crude to American refiners, is being excavated, according to the corporation, which also informed regulators in Washington County, Kansas, that they had not yet identified the cause. The disruption is anticipated to reduce supply at the storage hub in Cushing, Oklahoma, which serves as the delivery point for main U.S. crude oil stocks.
The dollar fell on Tuesday as a result of the United States’ consumer prices posting their slowest growth in nearly a year in November. This was good news for the Federal Reserve’s plans to scale down rate increases after raising rates rapidly in previous months to combat pressure on prices.
The Consumer Price Index for All Urban Consumers, or CPI for short, was forecasted by economists to increase by 7.3% in the year to November compared to its annual increase of 7.7% in October.
The Fed is currently considering a 50-basis point rise at its rate decision on December 14 after implementing four consecutive hefty rate increases of 75 percentage points from June through November.
What the next rate increase for February 2023 will look like is more crucial; on Tuesday, early signals from the capital markets pointed to a 25-basis point increase. If accurate, it would mirror the rate hike from March that kicked off the Fed’s run of rate increases in 2022.
