Dec 8 (Reuters) – Canada’s TC Energy shut its Keystone pipeline in the United States after more than 14,000 barrels of crude oil spilled into a creek in Kansas, making it one of the largest crude spills in the United States in nearly a decade. The cause of the leak, which occurred in Kansas about 20 miles (32 km) south of a key junction in Steele City, Nebraska, is unknown. It is the third spill of several thousand barrels of crude on the pipeline since it first opened in 2010. “We have shut down the Keystone Pipeline System and mobilized people and equipment in response to a confirmed release of oil into a creek, approximately 20 miles (approx. 32 kilometers) south of Steele City, NE,” the company said in a statement. TC Energy had to proceed with an emergency shutdown, and the response was initiated late on Wednesday after alarms and a detected pressure drop in the system. “The affected segment has been isolated, and booms deployed to control downstream migration of the release,” the company said. “The system remains shutdown as our crews actively respond and work to contain and recover the oil,” it added. TC Energy is notifying its customers of the situation and is actively cooperating with third parties to effectively respond to the incident. The company did not give a timeline or a date when oil flows would resume. The 2,687-mile Keystone Pipeline System plays a key role in connecting Alberta’s crude oil supplies to U.S. refining markets in Illinois, Oklahoma, and Texas, as well as connecting U.S. crude oil supplies from the Cushing, Oklahoma, hub to refining markets on the U.S. Gulf Coast through the Marketlink Pipeline System. The Keystone Pipeline, which carries around 600,000 barrels per day (bpd) of oil from Canada to the U.S. On Wednesday, the EIA reported a decline of 5.2 million barrels in U.S. crude inventories for the week to December 2. Yet, there were builds in the products category, with gasoline inventories up by 5.3 barrels in the week to December 2, and an inventory build of 6.2 million barrels in middle distillates, which include diesel. NN: Declining oil demand speculations was the order of the day. We decided to cash in our shorts on the spread trade and go neutral. See details in our trade reco section.
Oil Prices On Course For A 10% Loss This Week
- Oil prices are set to book a significant loss this week, with WTI and Brent on track to post a 10% loss if Friday’s trade is in line with the rest of the week.
- Demand concerns continue to trump bullish news in the oil market, with fears of a global recession being amplified by monetary policy tightening.
- The price cap on Russian oil has so far had a limited effect on oil markets, leading traders to sell their positions.
Crude oil prices are about to book a week of sizeable losses, during which market movements erased all gains Brent and West Texas Intermediate had made since the start of the year. According to Bloomberg, the cumulative weekly loss for the benchmarks could reach 10 percent if today’s trade is in line with what we’ve seen so far this week, as demand concerns trumped the news of China reopening after massive Covid restrictions. At the same time, even though the price cap on Russian oil that G7 put into effect on December 5 was theoretically bullish for oil, traders figured out it was unlikely to have any immediate effect on physical oil supply and instead of buying began selling their positions. This could yet change once the dust from the cap’s implementation settles and the potential for supply disruption unfolds. For now, there have only been hints: Turkey’s new proof-of-insurance rules are one such hint, which has got some 20 million barrels of Kazakh crude stuck in the Turkish straits. At the same time, traders are sounding the alarm over confusion in the physical oil market where cargos have never been traded at fixed, unchangeable prices. Meanwhile, however, fears of a looming global recession fuel a bearish mood among traders, and this is getting reflected in prices. “Oil has been dragged lower by broader recession fears that accompany global monetary policy tightening,” Vishnu Varathan, the head of Asia economics and strategy at Mizuho Bank, told Bloomberg. “And given the lags in monetary policy, a ‘wall of tightening’ may hit the global economy yet.” The bearish factors are strong right now that even the news of the Keystone pipeline spill and consequent shutdown did not have any substantial effect on oil prices. “I would tend to think that, any minute here, you’re going to see a headline hit the tape that’s going to say that Keystone is going to be back sooner rather than later,” Bob Yawger, director of energy futures at Mizuho, told Reuters. NN: I still see oil as having more work to the downside. This is not a selling opportunity to buy some real cheap oil. If you close out the sell side on your spread in essence you are buying oil by keeping your buy side… That could be phenomenal. if If IF we guess lucky….