BLBG:Oil Heads for Weekly Gain as TransCanada Shuts Keystone Pipeline
Oil headed for a second weekly gain in New York after TransCanada (TRP) Corp. shut its Keystone pipeline for repairs, disrupting crude supplies to the U.S. Midwest.
Futures were little changed, extending the longest run in more than a decade of daily price moves of less than 25 cents. Oil pared a decline of as much as 1.6 percent yesterday after TransCanada shut the 590,000 barrel-a-day line for three days, saying it found a “small anomaly” in a section running from Missouri to Illinois. Government data this week showed improving U.S. crude demand is being met by increased supplies.
“The market hasn’t reacted to the pipeline to a greater extent so that tells a story,” said Ric Spooner, a chief market analyst at CMC Markets in Sydney. “Oil has rallied hard from the lows of the middle of the year so a slightly better demand outlook is really not enough to allow oil prices to move much to the upside from here, particularly in the view that there is plenty of supply capacity.”
Crude for November delivery was at $92.11 a barrel, up 1 cent, in electronic trading on the New York Mercantile Exchange at 1:34 p.m. Singapore time. Futures slid 2 cents yesterday to $92.10. Prices are 0.3 percent higher this week and down 6.8 percent this year.
Brent oil for December settlement was at $112.46 a barrel, up 4 cents, on the London-based ICE Futures Europe exchange. The front-month European benchmark grade’s premium to the corresponding West Texas Intermediate contract was at $19.93. The gap has narrowed since reaching a one-year high of $23.95 on Oct. 15.
Safety Issues
WTI has gained 19 percent in New York since the intraday low this year of $77.28 on June 28. Prices have closed within 25 cents of the previous settlement for the past five days, the longest streak of moves that small in more than 10 years, according to data compiled by Bloomberg.
TransCanada may have to deliver extra oil volumes in November to make up for what shippers will lose this month as a result of Keystone being down, James Millar, a company spokesman in Calgary, said in an e-mail.
The company identified possible safety issues on the section during testing, Jeannie Layson, a spokeswoman for the U.S. Pipeline and Hazardous Materials Safety Administration, said in an e-mailed statement. PHMSA sent an inspector to observe the repairs, and hasn’t issued an enforcement action, she said.
U.S. Supplies
Petroleum demand in the U.S., the world’s biggest oil user, rose 4.3 percent last week to 19.5 million barrels a day for the biggest gain in two months, data from the Energy Department showed Oct. 17. Crude inventories climbed 2.9 million barrels to 369 million, the highest for this time of year since government records began in 1982. Production increased for a sixth week to 6.61 million barrels a day, the highest level since May 1995, the report showed.
Oil in New York has technical support around $90 a barrel in the coming week as futures trade within a symmetrical triangle on the daily chart, according to data compiled by Bloomberg. A settlement below the lower boundary of the formation will signal a so-called bearish breakout, where losses tend to accelerate.
To contact the reporters on this story: Jacob Adelman in Tokyo at jadelman1@bloomberg.net; Ramsey Al-Rikabi in Singapore at ralrikabi@bloomberg.net
To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net
