Market Considerations and Analytics
Key Notes
A major Canada-to-U.S. crude pipeline that was shut down because of a leak may soon resume operation, bringing a significant amount of petroleum back onto the market at a time when concerns about fuel demand were raised by the global economic downturn. This led to a decline in oil prices on Thursday.
By 11:29 a.m. EST (1629 GMT), Brent crude was down 67 cents, or 0.9%, to $76.50 per barrel, while U.S. West Texas Intermediate (WTI) crude was down 17 cents, or 0.2%, to $71.84.
After a spill into a Kansas creek, Canada’s TC Energy (NYSE: TRP) said that it has shut down its massive Keystone crude oil pipe, which can transport 622,000 barrels of heavy Canadian crude per day from Alberta to the U.S. Midwest and Gulf Coast.
After the firm reported the line’s suspension, oil prices increased; however, the market has subsequently modified its stance. The line was shut at around 8 p.m. CT on Wednesday (0200 GMT Thursday).
Fears of an economic downturn, declining fuel consumption, and the possibility of additional U.S. interest rate increases are all putting pressure on the energy markets. It’s widely believed that the Federal Reserve will raise interest rates by 50 basis points the following week.
Despite a drop in U.S. crude inventories last week, a rise in gasoline and distillate inventories added to worries about waning demand.
While at least 20 oil tankers encountered delays in their journey from Russia’s Black Sea ports to the Mediterranean, China made a statement on Wednesday detailing the most significant changes to its steadfast anti-COVID enforcement since the pandemic began with the goal of limiting losses.
According to Eikon statistics, the 14-day relative strength index for Brent has been below 30 on Thursday, a level considered by strategists to indicate a commodity is oversold and may be ready for a recovery.
On Wednesday, both Brent and U.S. crude reached 2022 lows, undoing all the gains achieved after Russia’s invasion of Ukraine created the greatest global energy ability to offer in decades and brought oil near to its record high of $147 per barrel.
After the G7 and EU announced fresh curbs on Russian oil shipments on December 5, Western officials were in discussions with their Turkish counterparts to end the tanker delays, a British Treasury official said on Wednesday.
