Oil Steadies After Part of Keystone Restarts and Dollar Surges

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Oil steadied after a three-day rally, as TC Energy Corp. restarted a section of the major Keystone pipeline and the dollar advanced.West Texas Intermediate futures edged lower to about $77 a barrel, trading in a narrow daily range along with global benchmark Brent crude. A section of the pipeline that extends from Hardisty, Alberta, to Wood River and Patoka, Illinois, was restarted and TC Energy is continuing repair and remediation on the affected segment.

Oil futures were also under some pressure from a rising dollar after the Federal Reserve rebuffed expectations for a dovish tilt and said interest rates will go higher for longer. A stronger greenback makes commodities priced in the currency less attractive.

US Holds Wednesday's Gain | WTI little changed after some of the Keystone Pipeline restarts

“We are recovering back to more normal levels after last week’s sell off,” said Jens Pedersen, a senior analyst at Danske Bank.

Oil is still on track for a slight annual gain following a volatile 12 months that’s been plagued by a persistent lack of liquidity. However, investors are juggling a mixed outlook for commodity demand, including the near-term impact of China’s end to Covid Zero, which has sparked a surge in infections.

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The International Energy Agency said Wednesday that oil prices could rally next year as sanctions squeeze Russian supply, although OPEC remains cautious about demand in early 2023. The US Federal Reserve also raised interest rates again and warned they still have room to climb.

Prices:

WTI for January delivery lost 0.4% to $76.99 a barrel at 10:17 a.m. London time.
Brent for February settlement eased 0.3% to $82.47 a barrel.

As cold weather hits large parts of Europe, diesel prices have also recovered from their recent slump. The ICE gasoil crack — a measure of the profitability of diesel over crude — climbed above $40 a barrel this week.