Saudi Arabias move to dispel doubts over Russia’s readiness to extend output curbs sent WTI and Brent crude oil benchmark prices up 2.32% and 2.10%, respectively.
Recently Saudi Arabia’s Energy Minister Khalid AL-Falih said that OPEC will announce the extension of production when the group meets on November 30. OPEC and non-OPEC countries including Russia made a deal in to cut crude oil production by 1.8 million barrels per day from January 2017 through March 2018.
Russia said it is hesitant to announce plans
for production cuts this early since its current deal does not expire for four months. Even though Russia’s hesitance is a concern for the forecasted oil prices, Al-Falih wants to reassure the market that the production cut will be extended.
Predicted increases in U.S. production will dull the impact of production cut-backs from OPEC, Russia and other exporting countries. Increased U.S. production challenges OPEC efforts to tighten the market and increase the price.
Another contributor was the disruption in oil flow from TransCanada’s (ticker: TRP) Keystone pipeline remaining shut in after a leak was detected in South Dakota yesterday. With the pipeline shut in, approximately 590,000 barrels of oil per day are not reaching the WTI delivery point at Cushing Oklahoma.
TransCanada said crews safely shut down its Keystone pipeline at approximately 6 a.m. CST (5 a.m. MST) after a drop in pressure was detected in its operating system resulting from an oil leak that is under investigation. The estimated volume of the leak is approximately 5,000 barrels. The section of pipe along a right-of-way approximately 35 miles (56 kilometres) south of the Ludden pump station in Marshall County, South Dakota was completely isolated within 15 minutes and emergency response procedures were activated.
TransCanada said that the pipeline from Hardisty, Alberta to Cushing, Oklahoma and to Wood River/Patoka, Illinois is expected to remain shut down as we respond to this incident. This does not affect the Marketlink pipeline system, which uses the facilities of the southern leg of the Keystone system from Cushing to the Gulf Coast, the company said.
In an update Nov. 17, TransCanada said there were more than 75 people supporting its incident response, including specialists in environmental management, metallurgy, engineering, pipeline integrity and emergency response. They continue to affirm the incident is controlled and there is no threat to public safety.
Members of the Pipeline and Hazardous Materials Safety Administration (PHMSA) are on site and monitoring progress. South Dakota Department of Environment and Natural Resources and other state agencies are on site.
