Now that the U.S. government has cleared the Keystone XL project of any dire environmental impact, attention is returning to why the pipeline was needed in the first place: to get more Canadian oil to U.S. refineries.
A long awaited report on the XL Keystone pipeline stated what everyone knew all along, the State Department said the Keystone XL pipeline would not have a significant impact on global warming or greenhouse gasses.
WTI got a big boost as Trans-Canada announced the southern leg of the Keystone Pipeline is operational driving up West Texas Intermediate versus Brent Crude as the market anticipates that will mean more products for export and a reduction in the global spread.
Oil is getting a yearend squeeze as inventories fall and geopolitical risks seem to be rising. War in South Sudan, a terror attack in Russia and labor trouble in Libya are giving the bulls a little ride.
With total U.S. crude oil and refined product inventories already lower by more than 33 million barrels since the middle of October, if crude oil enters into a strong destocking pattern as evidenced by the API report, the current oil price rally is likely to extend further.
The oil market is getting foggier as the American Petroleum Institute reported 12.4 million barrels drawdown in supply. The market seemed to sense what was coming as the market rallied into the number and exploded afterwards. Yet this shocker caused a massive rally.
Isn’t amazing how all of a sudden bullish stories seem to materialize when markets are at key support and oversold? Oil, which couldn’t buy a bullish story, all of a sudden got three that turned the market’s fortunes.