Oil gains as Keystone pipeline faces service interruption

March 08, 2024 (MLN): Oil prices rose following a temporary suspension of services at the Keystone pipeline, a crucial conduit responsible for transporting Canadian crude to the United States.

Brent crude traded near $83.4 per barrel, up by 0.53% on the day.

While West Texas Intermediate crude (WTI) was at $79.47 per barrel, up by 0.68% on the day.

Operator TC Energy Corp. confirmed Keystone’s integrity in a statement, adding that service was temporarily suspended “as a precautionary measure” and that no crude was released, as Bloomberg reported.

Oil has traded in a tight band this year, with even less volatile trading this week confining prices to their narrowest range since September 2021.

Cutbacks by OPEC+ and rising tensions in the Middle East and Red Sea have been balanced by surging supply from producers outside the cartel including the US.

Persistent concerns about China’s growth has added to headwinds.

Comments from Federal Reserve Chair Jerome Powell that the central bank is getting close to the confidence it needs to start lowering interest rates, which helped push the dollar to its sixth day of declines, were also supportive of commodities including crude.

“We expect oil markets to remain tight in the short term,” helped by OPEC+’s supply cuts and better-than-expected consumption data this week from the US and China, said Han Zhong Liang, an investment strategist at Standard Chartered Plc.

The bank has a three-month WTI forecast of $80 a barrel.

China’s oil demand has entered a low-growth phase as the nation shifts away from fossil fuels, the country’s biggest energy producer said.

While overall consumption will continue to grow, increased take-up of electric vehicles and trucks powered by liquefied natural gas will eat into gasoline and diesel use this year, Lu Ruquan, president of China National Petroleum Corp.’s Economics and Technology Research Institute, told Bloomberg Television.

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