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Oil up, settles near 7-year highs after Iraq-Turkey pipeline outage

CommoditiesJan 19, 2022 05:41PM ET
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© Reuters. FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019. REUTERS/Angus Mordant/File Photo

By Laura Sanicola

(Reuters) -Oil prices settled higher on Wednesday after a fire on a pipeline from Iraq to Turkey briefly stopped flows, increasing concerns about an already tight short-term supply outlook.

Flows have resumed through the Kirkuk-Ceyhan pipeline that carries crude from northern Iraq, the second-largest producer in the Organisation of the Petroleum Exporting Countries, to the Turkish port of Ceyhan for export.

The explosion that set off the fire on the pipeline in the southeastern Turkish province was caused by a falling power pylon, not an attack, a senior security source said.

Supply concerns mounted this week after Yemen's Houthi group attacked the United Arab Emirates, OPEC's third-largest producer, while Russia, the world's second-largest oil producer, has built up a large troop presence near Ukraine's border, stoking fears of invasion.

Brent crude futures settled up 93 cents, or 1.1%, at $88.44 a barrel. The global benchmark earlier touched $89.13, its highest level since Oct. 13, 2014.

U.S. West Texas Intermediate (WTI) crude futures settled up $1.53 at $86.96 a barrel, its highest level since Oct. 9, 2014.

"While $90 could have triggered some profit-taking and a minor cooling of prices, this suggests they'll see no reprieve and we could realistically see $100 oil soon," said Craig Erlam, senior market analyst at OANDA.

OPEC officials and analysts say that an oil rally may continue in the next few months and prices could top $100 a barrel due to recovering demand despite the spread of the Omicron coronavirus variant.

"Any way that the numbers are crunched, it appears that

global inventory will continue to draw for a few more months with this implied tightening in the balances keeping this bull alive through the rest of this month and most of next," said Jim Ritterbusch, president of Ritterbusch and Associates LLC in Galena, Illinois.

OPEC+, which groups the cartel with Russia and other producers, is struggling to hit their monthly output increase target of 400,000 barrels per day (bpd).

"Unplanned outages in Libya, Ecuador, and Kazakhstan, coupled with downgrades to U.S., Russia, and Brazil forecasts, together result in 1 million bpd lower supply this month than previously forecasted," Rystad Energy's senior oil markets analyst, Louise Dickson, said.

The International Energy Agency, however, said the oil market was due to flip into surplus in the first quarter as some producers are set to pump at or above all-time highs. [IEA/M]

An oil surplus should also lead to a build-up in inventories, as the IEA reported that commercial stocks in OECD countries were well below pre-pandemic levels at around seven-year lows.

On Wednesday, President Joe Biden told a news conference https://www.reuters.com/world/us/biden-address-skeptics-presidency-nears-one-year-mark-wednesday-2022-01-19 he will work to try to increase oil supplies.

The administration authorized the release of 50 million barrels of crude oil https://www.reuters.com/business/energy/us-release-50-mln-barrels-oil-emergency-reserve-white-house-2021-11-23 - in a mix of loans and sales - from the nation's Strategic Petroleum Reserve last year when prices spiked.

U.S. crude and gasoline stocks rose while distillate inventories fell last week, according to market sources citing American Petroleum Institute figures on Wednesday.

Crude stocks rose by 1.4 million barrels for the week ended Jan. 14. Gasoline inventories rose by 3.5 million barrels while distillate stocks fell by 1.2 million barrels, according to the sources, who spoke on condition of anonymity.

Oil up, settles near 7-year highs after Iraq-Turkey pipeline outage
 

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Comments (9)
Nityanand Poojary
Nityanand Poojary Jan 19, 2022 6:59PM ET
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America last and business mafia first. Thank you America for giving the world a great…. Leader? God save the world.
Heine Pedersen
Heine Pedersen Jan 19, 2022 2:15PM ET
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Stop the manipulation.
Robert Murphy
Robert Murphy Jan 19, 2022 12:50PM ET
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Maybe if we can get investment in our domestic energy companies we can get more active rigs instead of pumping up companies like Tesla.
Lucky Man
Lucky Man Jan 19, 2022 11:29AM ET
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so much drama - all of them are being plan so that price will not go down despite no demand...
Tyrone Jackson
Tyrone Jackson Jan 19, 2022 8:22AM ET
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Biden’s America is all about 100+ oil and war- In 3. 2. 1.
Heine Pedersen
Heine Pedersen Jan 19, 2022 8:22AM ET
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You're clueless..
Joel Schwartz
Joel Schwartz Jan 19, 2022 1:58AM ET
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The FED is cornered. Inflation in oil is what they predicted all year total every single day.
Marcus Bennett
Marcus Bennett Jan 18, 2022 11:52PM ET
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#Panasonic 🔆
Todd Gray
Todd Gray Jan 18, 2022 11:35PM ET
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Theater. Politicians need inflation. They have to hose the little guy to pay for all the wasteful spending, more costly favorous contracts, pork, and all the other bills. Plus, their political futures.
Bhagwan Dass
Bhagwan Dass Jan 18, 2022 9:57PM ET
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only Trump can do crude 33.00 doller
JongUn Kim
JongUn_Kim Jan 18, 2022 9:57PM ET
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Biden makes oil great again!
 
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