Oil Prices Recovering On China Reopening, Pipeline Closure & European Cold

MNI (Australia) - Oil prices rose further during today’s session after increasing strongly overnight on the back of the closure of the Keystone pipeline in North America. Further easing of Covid restrictions in China have also supported crude. WTI and Brent are up just over a percent to $73.95/bbl and $78.85 respectively, close to intraday highs.

• WTI oil prices have been reversing after clearing support at $71.00. Despite the rally, resistance is still some way from current prices at $78.23, the 20-day EMA. Brent came close to testing support at $78.11, resistance is at $80.81. There is currently limited liquidity in the market coming into year end.
• The Keystone pipeline, which connects oil fields in Canada to US refiners, has now leaked more oil than any other pipeline in the US in the last 12 years. A plan to restart it is yet to be submitted.
• China is the world’s largest oil importer and so recent measures to reopen from Covid are projected to boost oil demand. There are also expectations that there will be fiscal and monetary stimulus to boost growth.
• A cold snap in Europe is also increasing demand for heating fuels.
• Tonight’s US CPI report for November will be important and headline is forecast to moderate to 7.3% y/y from 7.7% and core to 6.1% y/y from 6.3%. The FOMC announcement is Wednesday and a 50bp hike is expected. There is also US API inventory data tonight.