Oil recovers from December 2021 lows after Keystone pipeline ‎shutdown

Oil prices rebounded today, Friday, as the closure of a major pipeline transporting crude from Canada to the United States disrupted supplies, but prices remained near the low levels recorded in December 2021 amid fears of slowing global demand growth.

By 0115 GMT, Brent crude futures were at $76.74 a barrel, up 59 cents, or 0.8 percent, after falling 1.3 percent on Thursday.

According to “Reuters”, US West Texas Intermediate crude rose 68 cents, or one percent, to $ 72.14 a barrel, after it recorded a decrease of 0.8 percent when settling in the previous session.

News of an accident that shut down Canada’s TC Energy’s Keystone pipeline in the US led to a short-lived rally on Thursday, but prices eventually eased as the market deemed the shutdown short-lived. More than 14,000 barrels of oil spilled into a small stream in Kansas, making it one of the largest crude spills in the United States in nearly a decade.

Edward Moya, an analyst at OANDA, said in a note that the news appears “only negative in the short term for supplies, but it does not change anything with the deterioration of the outlook for crude demand.”

He added that the prices of West Texas Intermediate crude oil are close to the level of $ 70, which is the price at which the administration of President Joe Biden is expected to start considering refilling the strategic petroleum reserves.

RBC Capital analyst Robert Cowan said that previous outages caused by an oil spill are usually fixed within about two weeks, but the most recent outage could last longer due to a spill into a waterway.

Oil prices are expected to record their largest weekly decline in months, as dealers believe that months will pass before the benefits of easing restrictions to combat the Corona virus in China reach demand.

Economists said that the high number of infections will likely dampen China’s economic growth over the next few months, leading to a recovery, but later in 2023.