In what may be a wise move, TransCanada Corporation (TO:TRP) called a timeout with the State Department to pause its review of the Keystone Pipeline. The reason, TransCanada says, is because they are reviewing with the State of Nebraska where the pipeline will be played out but in reality, they are calling the timeout to freeze out the U.S. State Department under President Obama who may actually reject the request. In what has become one of the most studied pipeline projects in history, Obama’s delaying of this decision for his entire time in office may lead to his predecessor making the final decision. This comes after government studies showed that the pipeline would not have any major impact on greenhouse gas emissions.
The State Department already has acknowledged that the impact of the Keystone Pipeline, a single pipeline in North America, would be miniscule. Climate change is a global problem and over time, Canada's tar sands will be mined and melted anyway whether or not Keystone XL ever gets built. In fact the State Department found that the pipeline is the most environmentally friendly option compared to other transportation alternatives, such as railroads and tanker ships. Despite the significant (and unique, due to the oil's characteristics) risk of spills, a pipeline like Keystone XL is a safer, cheaper and a more environmentally safe way of transporting oil. If the delay is granted, it would put the issue right smack in the middle of the Presidential debate and allow TransCanada time to see if the price and the demand for Canadian crude oil will come back.
More pressure inside the OPEC cartel. Leaked minutes of a draft report show growing anger at Saudi Arabia by smaller OPEC countries that feel it is time for OPEC to establish a fair price for oil. Saudi Arabia on the other hands say that it is not their job to fix the price because the market sets the price. The Saudis may even be less inclined to cut production because the Russians are pumping oil at a post-Soviet record of 10.78 million barrels a day last month beating Saudi Arabia's output of 10.1 million.
Oil inventories will be in play as traders will look for signs of falling U.S. oil output signs that refiners are lifting refinery runs. We are looking for crude to be up 1.0 mb, gas down 2.0 mb, distillates down 2.0 mb, Cushing down 500k and refining runs up 0.1.