By November 28, 2017 Read More →

Oil prices dip on OPEC pact jitters, Keystone pipeline restarts

Oil prices

Oil prices were pressured early in the session after a fire broke out at Exxon’s Beaumont, Texas refinery. photo.

Oil prices briefly pressured by fire at Texas refinery

Oil prices slipped on uncertainty over the outcome of OPEC’s meeting this week as well as an expected boost in crude supplies following the restart of the Keystone pipeline.

By 1:51 p.m. EST, US WTI had fallen 8 cents to $58.03/barrel and Brent was down by 9 cents to $63.29/barrel.  The Canadian Crude Index rose to $40.85.

According to Reuters, oil prices were pressured early in the session after a fire broke out at Exxon’s Beaumont, Texas refinery.  Firefighters were able to extinguish the blaze, but a small crude unit remains shuttered.

OPEC and non-OPEC members participating in the cartel’s supply cut agreement will meet on Wednesday and Thursday to discuss extending the deal.

Saudi Arabia is pushing to extend the deal while Russia is concerned that a year long extension would lead to an overheated market.

A joint OPEC and non-OPEC technical committee have recommended to prolong the agreement to the end of 2018, but with a caveat to review the deal in June.

Goldman Sachs analysts are say “We believe that the outcome of this meeting is much more uncertain than usual.”

“We view risks to oil prices as skewed to the downside this week as we believe that current prices, time spreads and positioning already reflect a high probability of a nine-month extension,” the Goldman analysts wrote.

Even if participants agree to an extension, Standard Chartered said oil prices have already factored in the deal.  “We think OPEC should err in the direction of over-tightening the oil market, and pull back later if needed.”

Should the pact come to an end in March, Wood Mackenzie says there would be about a 2.4 million barrel per day (b/d) year-on-year increase in world oil supply for 2018.

TransCanada Corp said it will restart the Keystone pipeline at reduced pressure on Tuesday after getting approval from US regulators.  The pipeline leaked 5,000 barrels of oil after a spill on Nov. 16.

The reduced flows from of the Alberta to US 590,000 b/d pipeline will keep seasonal inventory builds in check.

Later on Tuesday, the American Petroleum Institute will release its data on US crude stocks and on Wednesday, the US Energy Information Administration will report its crude inventory data.

Analysts surveyed ahead of the data expect a drop in US crude stocks of 3.2 million barrels.

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