Keystone Pipeline Remains Shut Down
November 5th, 2019
A spokesman for the US Pipeline and Hazardous Materials Safety Administration said on Monday the precise source of the leak on TC Energy’s Keystone oil pipeline has not been identified yet. There remains no estimated timeline for a restart of the 590,000 bpd crude oil pipeline which was shut down after the discovery of a 9,000 barrel leak last week.
President Trump has formally begun the process to withdraw the US from the Paris climate accord. This is supposed to take a year to get totally completed.
OPEC said that demand for its crude will decline by about 7% over the next four years amid a flood of US shale supplies. This news could cause OPEC members, including Saudi Arabia to reduce output even further from their already agreed to reductions. OPEC’s production of crude oil and other liquids is expected to decline to 32.8 million bpd by 2024 and that compares with 35 million bpd for 2019. OPEC Secretary General Mohammad Barkindo in the written forward of OPEC’s report said “Non-OPEC supply prospects have been revised up sharply, as US tight oil, in particular, has again outperformed expectations.” The US rig count has fallen over the last several weeks and the market may see US shale scaling back so traders will be interested to keep an eye on this and see how it progresses going forward. I think it is fair to says that US shale has surprised many by how much it has continue to produce but maybe a scale back is in the works.
China is pushing the US to remove more tariffs as part of the push to get phase 1 of the trade agreement signed. Reports are saying that a signing could take place later this month somewhere in the US. Optimism is currently high that progress is being made and something will get signed to try and continue to move this process forward. This China and US trade deal is big deal and positive progress drives the market and the S&P put in a new high yesterday on the current positive outlook.
Crude oil and refined fuel product price closed higher again yesterday, which was mainly driven by a better than expected US jobs report last week, another drop in crude oil rigs, increased US and China trade deal optimism, the Federal Reserve lowering the federal funds borrowing rate, and the US dollar near a 2-month low.
Early estimates from the Reuters survey is calling for a build in US crude stocks in this week’s DOE inventory report of 2.7 million barrels. This news many put a bit of cold water on the current rally but will need to come true in tomorrow report. The shutdown of the Keystone pipeline may have a bit of an impact on this and could change that outlook for a build as crude shipped on this Keystone line from Canada to the US has been shut down now for roughly a week.