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Oil falls on weakening demand, shrugs off Keystone closure

Commodities Dec 08, 2022 05:21PM ET
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© Reuters. FILE PHOTO: A view shows Chao Xing tanker at the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel/File Photo
 
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By Laila Kearney

NEW YORK (Reuters) - Oil settled lower for a fifth straight session on Thursday as traders shrugged off the closure of a major Canada-to-U.S. crude pipeline, focusing instead on concerns that global economic slowdowns would slash fuel demand.

Brent crude settled at $76.15 a barrel, losing $1.02, or 1.3%. U.S. West Texas Intermediate (WTI) crude settled at $71.46 a barrel, shedding 55 cents, or 0.8%.

Canada's TC Energy (NYSE:TRP) said it shut its 622,000 barrel-per-day Keystone pipeline, which is the primary line shipping heavy Canadian crude from Alberta to the U.S. Midwest and Gulf Coast, after a spill into a Kansas creek.

The line has had several spills since it began operating in 2010.

Oil prices rose after the company announced the closure, but the rally dissipated as analysts noted that the U.S. Gulf is likely to have enough inventory to handle short-term outages. Several analysts also said the section of the line that goes to Midwest refiners could be restarted soon. TC Energy has not announced when the pipeline would reopen.

"I would tend to think that, any minute here, you're going to see a headline hit the tape that's going to say that Keystone is going to be back sooner rather than later," said Bob Yawger, director of energy futures at Mizuho in New York.

The energy markets are weighed down by fears of an economic slowdown, weakening fuel demand amid the prospect of more U.S. interest rate hikes, with the Federal Reserve widely expected to raise interest rates by 50 basis points next week.

While U.S. crude inventories fell last week, gasoline and distillate inventories surged, adding to concern about easing demand. [EIA/S]

Limiting losses was an announcement by China on Wednesday detailing the most sweeping changes to its strict anti-COVID regime since the pandemic began, while at least 20 oil tankers faced delays in crossing to the Mediterranean from Russia's Black Sea ports.

The 14-day relative strength index for Brent was below 30 on Thursday according to Eikon data, a level taken by technical analysts as indicating an asset is oversold and could be poised for a rebound.

Both Brent and U.S. crude hit 2022 lows on Wednesday, unwinding all the gains made after Russia's invasion of Ukraine exacerbated the worst global energy supply crisis in decades and sent oil close to its all-time high of $147.

Western officials were in talks with Turkish counterparts to resolve the tanker queues, a British Treasury official said on Wednesday, after the G7 and European Union rolled out new restrictions aimed at Russian oil exports.

Oil falls on weakening demand, shrugs off Keystone closure
 

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Comments (10)
Kelly Mayer
Kelly Mayer Dec 09, 2022 1:37AM ET
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Meanwhile Coal is close to all time highs. Green agenda... yeah right.
JIM VETTER
JIM VETTER Dec 08, 2022 9:06PM ET
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Sooo.. how much money is Investing. com taking for these loser bots? You can report them, nothing happens. investing. com is worthless
Kelly Mayer
Kelly Mayer Dec 08, 2022 6:57PM ET
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Oil keeps falling, recession wont happen.
Andrew Ulferts
Andrew Ulferts Dec 08, 2022 5:41PM ET
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Weakening demand (weekly headline.)Huge crude draws (weekly reality.)
Kerry Ditto
Kerry Ditto Dec 08, 2022 4:01PM ET
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No complaint. Market is just right, not too hot, not too cold.
Wayne Cammack
Wayne Cammack Dec 08, 2022 3:50PM ET
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Keystone? Not a single word
First Last
First Last Dec 08, 2022 3:50PM ET
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This article contains about 500 words.
Jo Riley
Jo Riley Dec 08, 2022 3:50PM ET
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First Last  He meant the new proposed Keystone XL pipeline which Obama & Biden cancelled.  It  would have gone a shorter route from Canada to the US - covering less land and so having less environmental impact than the current Keystone pipeline.  Also less pipes mean more rail transportation which = much more possibilities for accidents.
First Last
First Last Dec 08, 2022 3:50PM ET
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Jo Riley   Keystone XL wouldn't be operational today if Biden hadn't cancelled it, and the part of Keystone that spilled currently would've still been transporting oil regardless of XL part, so there's no relevancy ... no reason anyone would be talking about XL w/ regards to this spill.
Kerry Ditto
Kerry Ditto Dec 08, 2022 1:19PM ET
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X-mas Pivot Rally. Bring it on.
Kelly Mayer
Kelly Mayer Dec 08, 2022 1:19PM ET
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Far from it. Pivoting is far away. When fed pivots, a recession usually follows. December will be about Jan earnings and recession fears. Technical chart analysis points to a s&p 500 of 3200-3300 between now and late january.
Kerry Ditto
Kerry Ditto Dec 08, 2022 1:00PM ET
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Maybe Biden 2nd term done deal rally?
JIM VETTER
JIM VETTER Dec 08, 2022 1:00PM ET
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You're very entertaining, if anything
Kerry Ditto
Kerry Ditto Dec 08, 2022 12:51PM ET
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A republican-leaning analyst seems to try to bring down stock market. Market is bigger than such an analyst. X-mas pivot rally appears increasingly apparent.
First Last
First Last Dec 08, 2022 12:33PM ET
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Trump rushed the shoddy approval of the Keystone XL with shortcuts.  If Biden didn't cancel it, it would be mired in lawsuits now, or causing an environmental disaster.
Bill Powers
Bill Powers Dec 08, 2022 12:33PM ET
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lmao excuses in fantasy land
JIM VETTER
JIM VETTER Dec 08, 2022 12:33PM ET
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Oh yeah, THAT'S the reason Biden canceled it. By his own admission it was to placate the environmentalist Left
First Last
First Last Dec 08, 2022 12:33PM ET
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JIM VETTER   "placate the environmentalist" by preventing probable environmental disasters.
First Last
First Last Dec 08, 2022 12:33PM ET
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This article is proof.   Keystone had better approval process, not under Trump, than Keystone XL's, and it still spilled.
 
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