U.S. oil prices rise to two-year high on Keystone outage

Cornelia Mascio
Novembre 24, 2017

USA light crude hit highs not seen since July 1, 2015 on Friday, trading at US$58.70 a barrel, before easing to US$58.53 by 0952 GMT but still 51 cents up on the day.

The oil market fundamentals may be improving, however, some traders still feel that gains are being limited by rising US production. Trading volumes were thin because of the Thanksgiving holiday in the United States.

Benchmark Brent crude was trading flat at US$63.58 a barrel, up just 3 cents on the day, after spending much of the Asia trading session in negative territory.

WTI oil prices traded flat on Thursday to close at $58 per barrel as the shutdown of a major crude pipeline from Canada and a draw on fuel inventories pointed to a tightening market, despite rising output from USA producers. The shutdown on TransCanada Corp's 590,000 - barrel - per - day Keystone pipeline following a spill last week has helped drive oil prices higher because of expectations it will r educe crude stocks in the US storage hub of Cushing, Oklahoma.

Markets have also tightened globally due to output cuts since January by the Organization of the Petroleum Exporting Countries, Russia and several other producers.

OPEC meets on November 30 and is expected to extend to the pact on cutting output beyond its March expiry, although Russian Federation has sent mixed signals about its support for an extension.

President Vladimir Putin indicated in October that Russia backed extending the deal to the end of 2018, but comments by officials and in Russian media have created uncertainty since then, he said. The event has driven up USA crude as stockpiles at the storage hub of Cushing, Oklahoma, have declined. Recently, it was reported that US oil production jumped by 15 percent since mid-2016 to a record 9.66 million bpd, thanks largely to aggressive shale drilling.

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