Crude oil began trading this week with a gain, pushed higher by the shutdown of the Keystone pipeline and uncertainty around the consequences of the G7 price cap on Russian oil exports.
Brent crude was trading close to $76.50 per barrel at the time of writing, with West Texas Intermediate at close to $71.60 per barrel, both up by more than 1 percent from Friday’s close. Last week, the benchmarks fell to the lowest since December last year.
The biggest driver for the last few weekly declines has been fear of a global recession, which would affect demand adversely. This fear has also been noted as reason for the limited gains oil has made following otherwise bullish news such as Russia’s reiteration that it would not export oil to price cap enforcers and China’s post-Covid reopening.
Even the news that OPEC+ had once again missed its production quota, and by quite a significant margin, failed to elicit a strong response from oil traders.
A survey from Argus showed on Friday that oil production in OPEC+ had fallen to 38.29 million barrels daily in November. This was 1.81 million bpd below the group’s updated, lower, quota.
What’s perhaps more worrying, although not surprising, is that it was OPEC that accounted for the decline while non-OPEC members of the wider pact saw their output increase in November. Kazakhstan’s output rose by 330,000 bpd while Russia saw its production inch up by 190,000 bpd.
Meanwhile, TC Energy shut down the Keystone pipeline after a leak was detected in Nebraska and did not give a timeline for the restart of the oil transport channel, fueling concern about supply in the United States. Keystone carries some 600,000 bpd of Canadian crude to the United States.
“Oil prices are higher as the Keystone pipeline remains shut, China’s COVID controls ease and on concerns that Russia could reduce output,” Oanda senior market analyst Edward Moya told Reuters earlier today.