Oil on Friday posted the biggest weekly loss since April as low liquidity fueled big price swings and as restarts for key pipelines alleviated supply concerns.
West Texas Intermediate (WTI) for January delivery briefly fell below US$71 a barrel to the lowest price in a year.
The US benchmark — along with Brent crude — has given up all of its gains for the year and on Friday slumped 0.62 percent to US$71.02 a barrel, down 11.2 percent from a week earlier.
Photo: REUTERS
Brent crude for January delivery declined 0.07 percent to US$76.10 a barrel, down 11.07 from a week earlier.
Thin trading has exacerbated price fluctuations, with volatility rising again on stronger-than-expected US inflation data.
TC Energy Corp was planning to restart one leg of the shuttered Keystone oil pipeline yesterday, following a 14,000-barrel oil spill, people familiar with the matter said.
Shell Plc has restored normal operations to a 20-inch segment of the Zydeco crude system after running it at reduced rates since last month.
Earlier this week, there were some concerns that the Keystone disruptions would put a dent into crude stockpiles in Cushing, Oklahoma, the largest US storage hub.
“Crude can’t find a bid as Keystone looks to come back online in short order,” CIBC Private Wealth Management senior energy trader Rebecca Babin said. “For now, every headline is being seen through a bearish lens, and buyers are not motivated get involved until they see demand signals improving.”
Friday’s WTI decline came on the back of a small rally earlier in the day triggered by Russian President Vladimir Putin saying the country might cut production in response to a G7 cap on the price of its oil.
“Commentary from Russia about cutting production is perceived as tactic to talk up price as opposed to having a meaningful impact on supply,” Babin said.
The WTI is on track for its first back-to-back quarterly decline since the middle of 2019 on a souring economic outlook as central banks tighten monetary policy, although US Secretary of the Treasury Janet Yellen still sees the US avoiding a recession.
Traders are also assessing the fallout from a price cap on Russian oil, which has led to a jam of tankers in Turkish waters due to a standoff over insurance.
The market continues to signal ample near-term supply, with the prompt spread — the difference between the two nearest contracts — for WTI and Brent crude holding in contango.
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